ANNUAL REPORT 2012

Annual Report 2012
for the year ended March 31, 2012

THE JAPAN STEEL WORKS, LTD.

Printed in Japan 2012.10

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JSW AR12表1-4

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Offices & Plants★ Japan Steel Works Europe GmbH★

Japan Steel Works India Private Limited

Japan Steel Works America, Inc.

★

★ ★ New York Office (Head Office)Detroit Office★ Head Office

JSW Machinery Trading (Shanghai) Co., Ltd.

ProfileDomestic
Head Office
Gate City Ohsaki-West Tower, 11-1, Osaki
1-chome, Shinagawa-ku, Tokyo 141-0032
Phone: +81-3-5745-2001
Facsimile: +81-3-5745-2025

Founded in 1907 in Muroran, Hokkaido — the centerof steel production in Japan — The Japan SteelWorks, Ltd. began as a joint venture with Britain’s Sir
W.G. Armstrong, Whitworth & Co., Ltd., and Vickers
Sons and Maxim, Ltd. with the goal of domestic
weapons production in Japan.
After World War II, the Company turned its sophisticated technologies and considerable experienceto the task of meeting peacetime needs. From steel
manufacturing and machinery development, to
new business fields such as automobiles, electricalequipment, information equipment, as well as heavy
industries such as electricity, steel, shipbuilding, andpetrochemicals, the Company widened its businesshorizons, and began to earn a worldwide reputation
as an integrated producer of steel materials andmanufacturer of machinery.
At present, meeting the needs of IT-relatedindustries, such as information and communication,
JSW’s global activities stretch beyond its existing
fields to encompass the development of such cuttingedge technologies as new energy, natural energy,
new materials, optics, and electronics. The Company
is also active in new fields such as environmental
businesses as a comprehensive material provider
and manufacturer of mechatronic products. Always
ahead of trends in society and industry, JSW is
preparing for sustained and vigorous growth in a wide
number of emerging areas to satisfy the demands of
its customers, shareholders and employees. In thisway JSW aims to enhance its enterprise value.

Osaka Office
Shinanobashi Mitsui Bldg., 11-7,
Utsubohonmachi 1-chome, Nishi-ku,
Osaka-shi, Osaka 550-0004
Phone: +81-6-6446-2480
Facsimile: +81-6-6446-2488
Fukuoka Office23-2, Sakuragaoka 1-chome, Kasuga-shi,
Fukuoka 816-0872
Phone: +81-92-582-8111
Facsimile: +81-92-582-8124

Contents
1
2
5
8
10
13
14
18
20
21
22
46
47

Financial Highlights (Consolidated)
Message from the President
JGP2014 – the JSW Group’s New
Medium-Term Management PlanOur Business Domains
Review of Operations
Research and Development
Corporate Governance
The Environment
Board of Directors, Corporate Auditorsand Executive Officers
Financial Section
Financial Performance (Consolidated)
Corporate Directory
Offices & Plants

Nagoya Office
Mitsui Sumitomo Kaijo Nagoya Shirakawa
Bldg., 9-15, Sakae 2-chome, Naka-ku,
Nagoya-shi, Aichi 460-0008
Phone: +81-52-222-1271
Facsimile: +81-52-222-1275
Hiroshima Office6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-0991
Facsimile: +81-82-822-0997
Sapporo OfficeKitaichijo Mitsui Bldg., 2-9,
Nishi 5-chome, Kita-ichijo, Chuo-ku,
Sapporo-shi, Hokkaido 060-0001
Phone: +81-11-241-2271
Facsimile: +81-11-241-2275

Muroran Plant
4, Chatsumachi, Muroran-shi,
Hokkaido 051-8505
Phone: +81-143-22-0143
Facsimile: +81-143-24-3440
Hiroshima Plant
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-3181
Facsimile: +81-82-285-2038
Yokohama Plant
2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004
Phone: +81-45-781-1111
Facsimile: +81-45-787-7200

Overseas
Japan Steel Works Europe GmbHFriedrichstr. 19, 40217 Düsseldorf,
F.R.Germany
Phone: +49-211-3116660
Facsimile: +49-211-31166640
Japan Steel Works America, Inc.
New York Office (Head Office)122 East 42nd Street, Suite 3810,
New York, NY 10168, U.S.A.
Phone: +1-212-490-2630
Facsimile: +1-212-490-2575
Detroit Office41135 Vincenti Court Novi, MI 48375 U.S.A.
Phone: +1-248-536-0288
Facsimile: +1-248-536-5615
Japan Steel Works India Private Limited
611, Time Tower, MG Road, Sector 28,
Gurgaon, Haryana, 122001, India
Phone: +91-124-469-4444
Facsimile: +91-124-469-4433

JSW Machinery Trading (Shanghai)Co., Ltd.
28A, Strength Plaza, No.600-4,
Tianshan Road, Shanghai, 200051, China
Phone: +86-21-6192-1022
Facsimile: +86-21-6192-1023
JSW Plastics Machinery, Inc.
555 South Promenade Ave., Unit 104
Corona, California 92879, U.S.A.
Phone: +1-951-898-0934
Facsimile: +1-951-898-0944
JSW Plastics Machinery (S) Pte Ltd.
17 Gul Lane, Jurong Town,
Singapore 629413, Republic of Singapore
Phone: +65-6861-4511
Facsimile: +65-6862-3166

JSW Plastics Machinery (TAIWAN) Corp.
1F., No.23, Da Hu 1st Rd., Guishan Shiang,
Taoyuan, County 33373, Taiwan, R.O.C.
Phone: +886-3-396-2102
Facsimile: +886-3-396-2104
JSW Plastics Machinery (M) SDN. BHD.
D6-5-G Block D6, Pusat Perdagangan Dana, 1
Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Phone: +60-3-7842-6076
Facsimile: +60-3-7842-6078
JSW Plastics Machinery (T) Co., Ltd.
78/6 JST Building 4th Floor, Moo7,
Kingkaew Road, Rachatewa, Bangplee,
Samutprakam 10540, Thailand
Phone: +66-2-738-5272
Facsimile: +66-2-738-5277

JSW Plastics Machinery (H.K.) Co., Ltd.
Room 907, Corporation Park, 11 On Lai
St., Shatin, N. T., Hong Kong
Phone: +852-2648-0720
Facsimile: +852-2686-8204

Forward-Looking Statements
The forward-looking statements in this annual
report reflect judgments based on information
available at the present time. Actual results
may differ widely due to various factors.

47

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Financial Highlights (Consolidated)
THE JAPAN STEEL WORKS, LTD. AND CONSOLIDATED SUBSIDIARIES

Years ended March 31, 2012, 2011 and 2010

Thousands of
U.S. Dollars

Millions of Yen

2012

2011

2010

2012

Net sales .........................................................

¥221,368¥212,929¥201,680$2,693,369

Operating income ...........................................

23,911

28,49532,185

290,923

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

12,591

16,532

17,528153,194

Total assets.....................................................

325,653

339,263

322,986

3,962,197

Total net assets...............................................

128,613120,820

111,149

1,564,825

ROE.................................................................

10.2%

14.4%

17.6%

Equity ratio ......................................................

39.2%

35.3%

34.0%

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

¥33.93¥44.54¥47.22$0.41

Cash dividends applicable to the year............

10.00

12.00

12.00

0.14

For the year:

At year-end:

Ratios:Amounts per share (yen and U.S. dollars):

Note: Amounts in U.S. dollars are presented solely for convenience and based on the rate of ¥82.19 = US$1.00,
the rate of exchange on March 30, 2012, the date of the Company’s most recent balance sheet.

44.54
33.93

25.00

47.22

37.50

43.19

2008 2009 2010 2011 2012

50.00

12.50

0

0

¥

47.10

5,000

12,59160,00016,532

10,00017,528120,000

16,03415,000Net Income per Share¥ million
20,00017,484Net Income

221,368

212,929

201,680

227,113

180,000

220,851

Net Sales¥ million
240,000

02008 2009 2010 2011 20122008 2009 2010 2011 20121

Message from the President

Regaining the growth pathby realizing our goals under
the JGP2014 new mediumterm management plan

Ikuo Sato
Representative Director & President

Business performance
The growth of the overall global economy slowed down during fiscal 2010 against thebackground of the fiscal and monetary crises in Europe, which led to the stagnation of theEuropean economies and consequent widening ripple effects. Other factors hampering
the global economy included growing inflationary pressures, even in emerging countries,
notably in Asia, which are expected to post good growth on the back of rising domestic
demand, and higher crude oil prices.
Meanwhile, the Japanese economy faced extremely severe conditions early in thereporting term, as a result of the Great East Japan Earthquake of March 11, which sundered
supply chains and forced constraints on the supply of electric power, leading to continued
stagnation in both demand for goods and production activity. The economy was also hurt
by a decline in Japanese firms’ export competitiveness, owing to the ongoing appreciationof the yen on the foreign exchange market. Toward the end of the term, however, theeconomy staged a rally thanks to a partial correction of the exchange rate and the impact ofvarious government stimulation measures.
Amid these conditions, the JSW Group carried out business activities in pursuit of thegoals of its three-year medium-term management plan, which commenced in fiscal 2010.

2

These goals are to “become the No.1 global monozukuri (manufacturing) company,” andto “raise our earnings through competitiveness in individual products and by leveraging
our comprehensive strength.” However, as a result of the earthquake and tsunami of March
11, 2011, and the resultant Fukushima Daiichi nuclear disaster, during the reporting period
we were forced to wrestle with difficult and unclear conditions, including a worldwide
reexamination of nuclear power strategies. We took steps to minimize the adverse impactof this situation on our nuclear power-related products, and have positioned efforts toincrease orders for our existing products as a management priority.
As a result of the above, net sales for fiscal 2011 on a consolidated basis increased 4.0%
over the previous year, to ¥221,368 million (US$2,693 million), despite a severe worseningof the external environment, thanks to growth by our Industrial Machinery Products
Business, which offset a decline by our Steel and Energy Products Business.
At the profit level, we had hoped that the growth in sales by the Industrial Machinery
Products Business would compensate for the decline in earnings by the Steel and Energy
Products Business, but the strong performance of the Industrial Machinery Products
Business was insufficient to offset the poor profitably of individual products manufacturedby the Steel and Energy Products Business due to an increase in the proportion of lowprofitability items and a decline in orders received. As a result, operating income fell by
16.1% year on year, to ¥23,911 million (US$290 million), ordinary income dropped
19.9% to ¥23,360 million (US$284 million), and net income was down 23.8% at ¥12,591
million (US$153 million), which includes the effect of a loss on valuation of investments
in securities.
Orders received by the Industrial Machinery Products Business held firm at a highlevel, orders received by the Steel and Energy Products Business were sluggish due tothe government’s reconsideration of its electric power and nuclear energy policies, andrestructuring being undertaken by these industries. We made efforts to acquire orders bythese divisions for products requiring quick delivery as an alternative to our conventional
mainline products, but total orders received were down by 8.1% from the previous year, at¥199,316 million (US$2,425 million).
Regarding the appropriation of profits, the Company remains committed tobolstering its internal reserves in order to fund the capital expenditure and expenditure ontechnological development required to ensure long-term and stable business operations,as well as to strengthen its financial position. At the same time, the Company follows abasic policy of paying stable and sustained dividends to its shareholders. The Company has
decided to pay an annual dividend of ¥10 per share for the fiscal year under review.

3Message from the President
Forecasts for fiscal 2012
Looking ahead, although the risk of a sudden deterioration in the global economy appears
to have receded in the wake of monetary easing measures taken by various governments,
crude oil prices remain high, the European sovereign debt crisis seems to have flaredup again, and the specter of slowdown or even stagnation continues to hover over the
emerging economies. In view of these factors, any growth or recovery by the global
economy is likely to be gradual. In Japan, further time is required to dispel deflationarypressure, and the yen is expected likely to remain strong for quite some time to come.
Although investment in post-disaster reconstruction should continue helping to shore up
the economy, little likelihood is seen of economic expansion or a real recovery.
The majority of the JSW Group’s principal products require long production anddelivery times, and therefore orders received in fiscal 2011 will have a major effect on sales
and earnings for the following term (fiscal 2012). In particular, for our Steel and Energy
Products Business, which suffered a sharp decline in orders during the reporting period, themiddle of fiscal 2012 should see a bottoming out for electric power generation (including
nuclear power) products, and we project a recovery in the second half of the term. The
majority of countries around the world, with the exception of Japan, are expected to finalize
their revised electric power and nuclear power policies from the mid-point of fiscal 2012
into the second half of the term, and projects are likely to commence subsequent to this.
We will carefully examine developments in this field and respond appropriately.
With respect to our Industrial Machinery Products Business, sales and earnings
are projected to remain robust, but no firm predictions can be made in view of theunpredictable nature of the Group’s business environment. We plan to focus our efforts
on achieving further cost improvements and on expanding our operations in the fieldof high-value added products, which will be less susceptible to changes in the operating
environment.
June 2012

Ikuo Sato
Representative Director & President

4

JGP2014 – the JSW Group’s New MediumTerm Management Plan
We have drawn up a new medium-term management plan, under the name of JGP2014, covering the three-year period
from April 2012 to March 2015. Our twin goals under this plan are to become “the No.1 global monozukuri (manufacturing) company” and “a corporate group with a stable earnings structure and strong financial position.”

Overview of JGP2014 Medium-Term Management Plan
We aim to regain the growth path by building the Group’s products into the leading presence in the global
market, and to marshal the total strength of all JSW Group companies – including new business alliances – toexpand our business operations into new growth markets and business fields.

1. Overview
JGP2014: JSW Group Growth Plan FY2012-2014
Our goal: • To become the No.1 global monozukuri (manufacturing) corporate group— To provide the world’s best products and services and become a group fully capable of competing in the global
marketplace• A corporate group with a stable earnings structure and strong financial position

2. Numerical targets
Sales
FY2012¥225 billion

Operating Income
FY2014FY2012FY2014¥250 billion¥15.2 billion
6.8%¥27 billion
10% or higher(Operating income margin)

ROE

Capital Ratio

FY2012FY2014FY2012FY2014

7%

10% or higher

43%

48% or higher• Plan recovery in steel products segment and sustained growth in industrial machinery segment• Strengthen our business base following the end of the current medium-term plan

Basic Management Policies
1. Grow our products into global market leaders• Steps to strengthen the competitiveness of our products tobe undertaken as Groupwide project (under name of Global
No.1 Project), leveraging comprehensive strength of entire

Group and involving prioritized allocation of management
resources

2. Strengthen expansion of business operations into growth markets and growth fields• Growth markets = Asia, emerging nations• Growth fields = energy/environment, electronics/information &telecommunications, motor vehicles: 씮expand technologicalfields, scope of business, and customer base through fusion
with materials technology and mechatronics

Scale of business in growth markets (orders)
FY2011FY2014(current medium-term plan)

Emerging nations¥40 billion¥60 billion(of which, China)(¥20 billion)(¥35 billion)

5

JGP2014 – the JSW Group’s New Medium-Term Management Plan
3. Creating global network of monozukuri alliances• To cope with changes in the business environment,
particularly in our main markets and in the competitive
structure, we must abandon the go-it-alone approach andform alliances toward specific targets, and must also speed
up the development of our operations• Selection as appropriate from various methods, including
M&As, capital tie-ups, business alliances, licensing agreements, and so on

4. Strengthen business base
• Reinforce control over affiliated companies and reorganize
Group structure to strengthen the Group’s management• Invest in the training of human resources and globalization• Implement strategic investments
Capital investment¥6 billion/year

R&D expenditure¥5 billion/year

Other strategic investments¥10 billion+␣/3 years• Strengthen financial position through more efficient employment of working capital and strict management of strategic
investments
aiming at numerical targets of ROE 10% or higher andcapital ratio of 48% or higher by FY2014

Projected Development of Overall Business Performance andIndicators During JGP2014 Plan Period
Regaining the growth path by realizing our goals under JGP2014
Laying the groundwork for attainment of ¥300 billion annual sales after end of JGP2014
Steel and Energy
Products Business

Expand lineup of energy-related products and construct production and marketing system to meetneeds of emerging nations

Industrial Machinery
Products Business

Expand earnings by strengthening technology to create superior products and by launching new
products, to expand operations in growth markets and growth fields

Examine and implement a variety of alliances to enhance the Group’s manufacturing capabilities in pursuit of these objectives

Sales and Operating Income
Steel and Energy Products BusinessIndustrial Machinery Products Business
Real Estate and Other Businesses

Operating income

Medium-Term Management Plan (JGP2014)(billions of yen)

250

240.0
221.3

225.0
2.4

2.0

250.0
27.0

(billions of yen)

30

2.0

2.0

200

23.9
150

113.9

20.0
123.0

128.0

138.0

20

15.2
100
10
50

105.0

100.0

110.0

110.0

0

0

FY2011

6FY2012FY2013

FY2014(Est.)(targets under JGP2014)(targets under JGP2014)

After conclusion of
JGP2014

Return on Equity (ROE)
Net income

Capital Ratio

Shareholders’ equity (net worth)ROE(billions of yen)

ROE of200

Shareholders’ equity (net worth)(%)(billions of yen)

15

400

Net worth

Capital ratio

Capital ratio of
48% or more

(%)

50

50

10% or more
154.0

150

50

100

(Est.)

142.0

134.0

5

154.0

43

16.0

12.0

0

FY2012

45

200

7

9.0

307.0

46

9

0

307.0

10

11

100

308.0

300

142.0

134.0

FY20130

FY201440

FY2012(targets under JGP2014) (targets under JGP2014)(Est.)FY2013

FY2014(targets under JGP2014) (targets under JGP2014)

Basic Strategies, Sales, and Operating Income by Segment
Steel and Energy Products Business
Sales(billions of yen)

Operating income(billions of yen)

Medium-Term Management Plan (JGP2014)

150

100

105.0

110.0

30

110.0

100.0

20

11.5

11.0

50

10

7.0
3.2
0

Basic Strategies• Maintain scale of sale of nuclear power products throughmarketing initiatives in countries newly developing their
nuclear power sectors (¥45-50 bn)• Expand sales of clad steel plates & pipes and windturbine systems by taking advantage of demand trends• Reinforce price-competitiveness through construction of
global alliances• Raise capacity utilization rate to make full use of stateof-the-art production equipment• Develop products in new fields, as well as new
businesses

0

FY2011FY2012FY2013

FY2014(Est.)(targets under
JGP2014)(targets under
JGP2014)

Sales to Recover from a Bottom in FY2012

Industrial Machinery Products Business
Sales(billions of yen)

Operating income(billions of yen)

Medium-Term Management Plan (JGP2014)

150

30

138.0
113.9

123.0

128.0

100

20

16.2
11.5

12.6

13.2

50

10

0

Basic Strategies• Raise the Group’s global profile through productdifferentiation• Improve and reinforce organizational structure to expand
service operations• Improve processing technology to expand sales of plant
equipment• Strengthen price-competitiveness to win orders inemerging markets• Develop new products in new business fields throughintegration of platform technologies

0

FY2011FY2012FY2013

FY2014(Est.)(targets under
JGP2014)(targets under
JGP2014)Maintain Growth beyond FY2012

7

Our Business Domains
JSW and the JSW Group carry out a wide range of business activities in a variety of fields. In the Steel and Energy
Products Business, these activities include the production and sale of steel castings and forgings, steel plates andstructures, as well as wind turbine system equipment, which is a business area developed in recent years. In the
Industrial Machinery Products Business, these activities include the production and sale of plastics machinery and othermachinery, magnesium alloy injection molding machines and molded products, and IT equipment. In addition, as part ofour program of business diversification, we are active in regional development, information systems and other areas in
the Real Estate and Other Businesses.

Steel and Energy Products Business
Sales Composition

47%

8

Steel Products

Steel Plates and Structures

Wind Turbines

Making steel in electric furnaces, we produce a broad range of cast products andsteel ingots for forged products. In ingots
for forgings, we have one of the world’s
largest production capacities, of 650 tons.
Our range of presses and hammers of various types and sizes, including two 14,000ton hydraulic presses, ensures that we candeliver forgings in any needed shape. After
undergoing heat treatment, machining andfinishing, the forged products are used in
the electric power generation industry (fossil fuel, hydroelectric and nuclear), and thesteel-making, oil refinery and industrial
machinery sectors. In addition to being aleading global supplier of extra large forgedproducts, our plant produce a wide range ofhigh-quality small- and medium-sized steel
cast and forged products.

With one of Japan’s largest 4-thick plate
reversing rolling mills, we can roll highquality, extremely thick, wide, and longsteel plates (maximum thickness: 350 millimeters, maximum width: 4.8 meters, maximum length: 20 meters). Using advanced
manufacturing technology we now mainly
produce high-quality clad steel plates andclad steel pipes using clad steel plates. In
addition, by integrating various forged steel
products and leveraging our state-of-theart welding technologies and facilities, we
produce a range of pressure vessels for verylarge welded structures such as oil refineries
and petrochemical plants, in an integrated
process from raw materials to finishedproducts. All of our products are used ina wide range of industrial applications inJapan and overseas, giving this business aunique profile.

This sector deals with the entire windturbine power generation system business, designing its own towers, blades andequipment for power generators used inlarge windmills (2,000kW). Higher power
generation efficiency and ease of maintenance have been achieved for power
generators through the use of permanent
magnet synchronous generators and theelimination of step-up gears. This sector
provides windmills of superior reliability,
which are needed for Japan’s unstable windconditions.

Main Business Lines

Main Business Lines

Main Business Lines

Production and sale of products for power
generation, steel-making, chemical machinery, nuclear power-related machinery andequipment, die materials, and other areas

Production and sale of products for oil
refining, petrochemical, general chemical,
and power generation industries, as well asa wide range of pressure vessels, clad steel
plates, clad steel pipes, extra-thick steel
plates, and other areas

Production, sale and maintenance of windturbine system equipment

Industrial Machinery Products
Business
Sales Composition

Real Estate andOther Businesses
Sales Composition

1%
52%

Plastics Machinery

Other Machinery

Regional Development

Having established a microcellular foam processing
technology for greater weight reduction and heatretention, we lead the competition in developing
products that address the growing sophisticationand diversity of plastics materials. We have built
up a solid position as a comprehensive plastics
machinery manufacturer involved in everythingfrom pelletizers to processing machinery.
In injection molding machines, we are meetingcurrent market demand for greater molding precision, productivity and environment-friendliness by
upgrading basic performance of existing injection
molding systems and developing energy-saving,
electrically-driven injection molding machines.
To respond to diversifying needs in theseproduct markets, we have established a Technology
Development Center and engage in wide-ranging
consultation with product users, enabling us to put
in place an integrated development system to copewith changing demand, from manufacturing toprocessing machinery.

Supported by a proprietary technologies
and facilities, JSW produces industrial
machinery for a wide range of demand,
including defense equipment, power plant
equipment, magnesium alloy injection
molding machines, aluminum die-castingmachines, laser annealing systems, rollingstock parts, and environmental facilities.

Centered on the construction of officebuildings, commercial facilities, and rental
condominiums on Company-owned land,
we engage in regional development operations with the objective of ensuring stableearnings through the utilization of idle
assets. Our goal is to raise our earnings
and revitalize local communities througha more effective application of our assets,based on the reserves of expertise we haveaccumulated in our business operations.

Main Business Lines

Main Business Lines

Main Business Lines

Production and sale of plastic injection
molding machines, plastics production andprocessing machinery (including pelletizers, compound extruders, films and sheet
manufacturing equipment, and others) andblow-molding machines

Production, sale, and maintenance of
fluid machinery, hydraulic machines,
machinery for the production of electronic
components and displays (laser annealing
systems, etc.), magnesium alloy injection
molding machines, aluminum die-castingmachine, JSW-type automatic tightlock
couplers/W-type vehicle shock absorbers,
and defense equipment

Rental of property, and development/subdivision for sale9Review of Operations

Steel and Energy Products Business
Steel Products Sector/Steel Plates and Structures Sector/
Wind Turbines Sector

Shell Flange Used for Pressure Chamber for
Nuclear Power Plant

105,000

J82 Wind Turbine System

Performance in fiscal 2011
Orders came to ¥78,068 million (US$949 million), a year-on-year

123,271

decrease of 21.0%. Orders for products for use in the electrical power
98,829Orders Received¥ million
140,000

Clad Steel Plate

generation industry (including nuclear power) decreased sharply
78,06870,000against the background of a worldwide reassessment of nuclear power

35,000policy, while orders for clad steel plates and pipes recorded a decline ona year-on-year comparison owing to the large-scale orders received in

0

2011

2010

2012

fiscal 2010. Orders for pressure vessels for oil refineries, and for windturbine system equipment, also fell short of expectations.
year decrease of 7.0%. Although sales of clad steel plates and pipes

105,001

112,915

90,000

Sales came to ¥105,001 million (US$1,277 million), a year-on121,921

Sales¥ million
120,000

benefited from the posting of sales of large-scale orders received in theprevious year, and sales of products for the electrical power generation

60,000industry (including nuclear power) included those from orders received
in previous years, these factors were more than offset by a decline in

30,000sales of pressure vessels for oil refineries, and of wind turbine system
0

2010

2011

2012

equipment.
Operating income came to ¥11,517 million (US$140 million), a
year-on-year decrease of 54.0%. Despite implementing a range of costcutting measures, we were unable to counteract the adverse effects of anumber of factors, including a lower capacity utilization rate due to thedecrease in orders received, intensifying export competition caused by
the yen’s high exchange rate and a decline in the average selling price,
and a deterioration in the Company’s profitability owing to a change inthe product structure.

10Industrial Machinery Products Business
Plastics Machinery Sector/Other Machinery Sector

Polyolefin Extruder/Pelletizer

Large-Size All-Electric Injection Molding
Machine (24600kN)

Performance in fiscal 2011
Orders rose 2.7% year on year, to ¥118,858 million (US$1,446 mil-

120,000lion). Although orders for laser annealing equipment declined due to118,858

84,15980,000115,699

Orders Received¥ million
160,000

Magnesium Alloy Injection Molding Machine(280t)

the fact that ordering negotiations were prolonged into the following
term, as well as other factors, growth was recorded in orders for plastic
production and processing machinery, notably film-forming equip-

40,000ment, and orders for plastic injection molding machines and other
0

2011

2010

2012

machinery held firm.
Sales increased 16.7% to ¥113,959 million (US$1,386 million).
Growth was seen in sales of plastic production and processing machin-

77,35660,00097,66490,000ery such as pelletizers and twin-screw extruders, as well as ancillary

113,959

Sales¥ million
120,000

components and conversion work, and in sales of laser annealing
equipment, while sales of plastic injection molding machines held firm.
Operating income posted a sharp rise of 254.8%, to ¥11,542 million (US$140 million). This is attributable to increased sales, radical

30,000cost-cutting measures, and to steps taken by the Company to enhance
0

2010

2011

2012

its lineup of high-value-added products born out of a level of technological expertise that differentiates the Company from its rivals. These
steps were all the more necessary as a result of increasingly fierce pricecompetition caused by the strong yen.

11

Review of Operations

Real Estate and Other Businesses
Regional Development

Business Office Development(Fuchu Intelligent Park)

Sales

3,000

Orders totaled ¥2,389 million (US$29(US$29 million) and operating income

2,407

1,000

2,349

2,000

million), sales came to ¥2,407 million
2,402

2,389

2,354

2,000

Performance in fiscal 2011

¥ million
4,000

3,000

2,412

Orders Received¥ million
4,000

JSW Apartment Building Development(Fuchu, Tokyo)

amounted to ¥776 million (US$9million).

1,000

0

2010

2011

2012

0

2010

2011

2012

Capital Expenditures
Capital expenditures for the reporting period totaled ¥8,256 million (US$100 million), with the majority spent on
installation, improvement and maintenance work on a variety of production facilities.
Details of capital expenditure by individual business segment are as follows.
In the Steel and Energy Products Business, capital expenditures totaled ¥6,238 million (US$75 million). This
expenditure consisted largely of investments in the construction of new buildings and equipment for the Special
Melting and Heat Treatment facilities, as well as in the upgrading of equipment at the Designing Center at the
Muroran Plant.
In the Industrial Machinery Products Business, capital expenditures came to ¥1,896 million (US$23 million),primary as a result of investments in higher machine processing efficiency at our Hiroshima Plant.
In the Real Estate and Other Businesses, capital expenditure consisted primarily of the upgrading of facilities onreal estate for rental purposes, totaling ¥78 million (US$0.9 million).
Capital expenditures unallocable to individual segments came to ¥42 million (US$0.5 million).
12

Research and Development

Muroran Research Laboratory

Research and development activities were almost entirely
funded by the Company (The Japan Steel Works, Ltd.).
Combined spending on research and development for
the Steel and Energy Products Business and the Industrial
Machinery Products Business amounted to ¥4,626 million(US$56 million).
As a materials and mechatronics company, we strive
to develop new products and production techniques using
our own technology, while also actively promoting widespread technical alliances and joint development in aneffort to put new products and technologies into effect as
quickly as possible.
In terms of the direction of research and development,
our Research and Development Headquarters continues topromote cooperation with individual business divisions
in order to: (1) improve the capabilities, performance andreliability of our core products and (2) develop products
in new business fields based on our core and differentiatedtechnologies.
Our Research and Development Headquarters
encompasses our headquarters (located at Head Office),
the Muroran Research Laboratory (situated on the premises of the Muroran Plant), and the Hiroshima ResearchLaboratory (located at the Hiroshima Plant).
Our basic research and development policy is as follows.
1. Promoting the development of new products and businesses by focusing on the technological fields of newenergy & energy savings, information & telecommunications, nanotechnology & materials, and new production
technologies, which are directly related to our current
business activities. We aim to develop our existing business by focusing on increasing and upgrading our coretechnologies while pursuing increased collaboration
between the Research and Development Headquarters
and our business divisions.
2. Promoting not only basic research aimed at future technologies and the needs of 21st century society but also
research on component technologies used in existingproducts, we will develop these into research and development projects that will translate into new products
and businesses in the future as well as into innovations
and new possibilities for existing products.
3. In product development for Steel Products, we arefocusing on energy fields and on further expanding thenumber of our many No.1 products while at the sametime commercializing products in new fields.

Hiroshima Research Laboratory

In Machinery Products, we are aggressively promoting the expansion and upgrade of industrial machinery
including plastics machinery and IT equipment. We willprioritize investments in business resources by defining
a framework for commercialization with an eye toward
mergers and acquisitions and the forging of alliances.

Overview of R&D activities by businesssegment
GGG Steel and Energy Products BusinessIn terms of the development of steel products centered onmaterials, we have been carrying out materials development in such areas as clad steel pipes for natural gas transportation, large steel castings and forgings and high alloymaterials for high-efficiency thermal power generation,
forged steel products for next-generation nuclear power
plants, and high-performance nonferrous alloys, as well as
manufacturing process technology development. We havealso been pursuing technological development to create
more advanced materials and component technologies forexisting products. In the field of new energy, we have set
out to design wind turbine blades for use at wind power
generation plants, establish various reliability-related analytical technologies and develop more advanced component technologies for power generators.
For fiscal 2011, spending on steel and energy products’ research and development totaled ¥1,887 million(US$22 million).
GGG Industrial Machinery Products BusinessIn the field of machinery-related products, we have beendeveloping low-cost production technologies for high performance magnesium alloy injection molding machines,
the commercialization of aluminum die-casting devices,
tightlock couplers and shock absorbers tailored to European
specifications, high-precision molding technology for plastic
extruder and injection molding machinery, and micro-nanomelt transcription molding process equipment. We havealso been developing higher performance compressors andequipment for making film, as well as laser applications,
including systems for cutting-edge laser annealing equipment used in the production of TFT (thin-film transistor) liquid crystal displays, and other applications for laser devices.
Research and development expenses for the reporting
term came to ¥2,738 million (US$33 million).

13

Corporate Governance
Basic Stance on Corporate Governance
At JSW, we believe we must earn the trust of all our stakeholders, including our shareholders and employees,
not merely to raise our enterprise value, which comprises both the Company’s economic value and its value
to society in the broader sense, but to make possible our very existence.
We have, therefore, designed a set of management structures to ensure an effective system of corporate
governance, and have taken all necessary measures to facilitate the appropriate disclosure of corporate
information so as to achieve the level of management transparency demanded by investors today.

An Outline of Our Corporate
Governance System
The Company employs the traditional statutory auditor
system, comprising seven directors (one of whom is an
outside director) and four statutory auditors (hereafter,“corporate auditors”), of whom two are outside
auditors.
The term of office of directors is one year, and wehave adopted the corporate officer system andseparated the decision-making and oversight functions
from the executive functions performed by the
corporate officers. In this way, we have taken steps to
speed up management decision-making and enhance
the performance of both oversight and executivefunctions.
In principle, the Board of Directors’ meeting isconvened once a month. At the meeting, decisions andreports are made on matters of importance to the
management of the Company, including basic
management policies and matters stipulated by legal
statute. Meetings are also attended by senior corporate
officers and those of higher rank. The Board of
Directors is also positioned as an oversight body withrespect to the performance of their duties by the
directors and corporate officers.
In addition, a Strategy Council composed of three
representative directors and other officers designated by
the President, including one outside director and one
auditor (chosen by rotation) meets once each week todiscuss and make decisions on matters of management
importance and other matters of importance to theperformance of their duties by the directors and14

corporate officers, as well as to discuss, report, andmonitor matters relating to overall management of theCompany.
In addition to these bodies, the Management
Council, consisting of directors, auditors, the heads ofoperating divisions, plant general managers andmanagers at corporate headquarters, and other persons
with executive responsibility, convenes once a monthin principle. The Management Council analyzes thebusiness environment, monitors the progress ofbusiness plans, and ensures that knowledge is widely
shared among the Company’s management and isreflected in their decisions and that risk management
and compliance are rigorously observed.
The Board of Corporate Auditors consists of four
corporate auditors, of which two are outside corporate
auditors with one serving full-time. The Company’s
corporate auditors attend meetings of the Board of
Directors, the Executive Board, the Management
Council and other important meetings. They also pay
regular inspection visits to all the Company’s plants
and offices and to Group subsidiaries once during eachhalf of the fiscal year, as a general rule. They exercise
strict oversight with regard to the execution ofCompany directors’ duties, such as by receiving
important reports when needed from theaforementioned divisions and exchanging views withdirectors and key employees. Based on this, theyexpress their views to management from an objective
and neutral point of view.

Our Internal Control
and Risk Management System
JSW regards it as a management issue of crucial
importance to have an effective internal control system
in place to ensure the correct performance of business
operations. We are, therefore, working to improve oursystem of internal control in line with our Basic Policy
on Internal Control Systems resolved at the meetings ofthe Board of Directors, in addition to the Regulations
Regarding the Promotion of Internal Control Activities(one of the Company’s internal regulations). In
addition, we will respond to social changes and work toachieve a more appropriate and efficient system byproperly reviewing internal control issues andresponses. The points below delineate the fundamental
stance adopted by the management of JSW toward theissue of internal control, and the progress achieved thus
far in strengthening the Company’s internal control
system.
1. Improving the internal control system
In addition to setting up a specialist unit dedicated tosupervising the Company’s internal control system,
the Internal Control Committee holds meetings onan ad hoc basis, as deemed necessary.
2. Observance of legal regulations and theCompany’s Articles of Incorporation
JSW does not limit compliance to the prevention ofillegal acts and the observance of legal regulations
and the Company’s Articles of Incorporation. It
views compliance in the broader context of generalsocial responsibilities and the upholding of a wide
variety of rules and regulations. The key to successfor compliance activities lies in having directors andcorporate officers take the initiative in setting an
example and practicing truthfulness, while raising
employee awareness on compliance issues througheducation and training and promoting this in an
integrated manner with risk management.
JSW has established a department responsiblefor internal audits to ensure that the Company’s
overall operations observe all laws and regulations,as well as in-house rules. In addition to periodic

audits, this department conducts spot audits, as
deemed necessary. The results of these audits arereported to the president and relevant parties
including, as appropriate, the Board of Directors, theExecutive Board, the Management Council and theBoard of Corporate Auditors.
We have also created a system of internal andexternal routes for reporting and discussing
compliance violations when discovered. The person
filing the report is guaranteed anonymity. Violators,
regardless of whether they are directors, corporate
officers or staff, will be punished accordingly, andmeasures will be taken swiftly to prevent any
recurrence.
The Company has clarified in its Corporate Codeof Conduct its policy of strict opposition to theactivities of criminal organizations or individuals
and it takes firm action to eliminate these anti-social
forces through the establishment of a single
dedicated office for the communication of relevant
information and the management ofcountermeasures.
3. Safeguarding and management of information
The Company appoints a director or corporate
officer to be the chief information security officer(CISO) to ensure the safeguarding and managementof information. In accordance with rules andregulations governing the management of
documents and information, the Company storesand manages important information related to the
execution of directors’ and corporate officers’ duties
including the minutes of important meetings andwritten requests for management decision approval(ringisho), and other important documents as written
documents or as electronic records held in
safekeeping. Further, directors and corporate
auditors are able to access and view or copy thisinformation as needed.
The Company also discloses financial andimportant management information in a timely andappropriate manner.
4. Risk management
At JSW, directors, who concurrently serve as the15

Corporate Governancemanagers at corporate headquarters, corporate
officers, and employees understand and evaluate therisks involved in carrying out their duties in theirdivisions, and within the scope of their authority, as
stipulated by regulations and the system for
management decision approval (ringisho), they
ensure that they execute their duties efficiently andrespond to risks in an integrated manner. Importantmatters pertaining to risk management are discussed
at meetings of the Board of Directors or of the
Executive Board.
The Company has established regulations forrisk management and defined a Companywide risk
management system. With respect to risk based onfunctions such as safety and hygiene, environmental
management, information security, and security
export controls, the relevant division in charge of
those risks sets up committees or creates regulations
for managing each of those risks across divisionboundaries and then appropriately manages them. A
director or corporate officer of the Company has
been placed in charge of CSR and risk management
who monitors these risk management conditions incollaboration with the department responsible forinternal audits and reports to the Board of Directors
or the Executive Board.
Risk managers are assigned within each divisionat the headquarters, within each business unit, andat each plant. These risk managers ascertain theappropriateness of existing measures and work toeliminate everyday risks. In the case of critical risk
situations, a crisis management headquarters isestablished to provide the appropriate response. In
this way, we are responding to risks under bothordinary and extraordinary circumstances.
5. Ensuring efficient performance of duties
To ensure rapid decision-making and the flexible
and efficient performance of management duties, thepresident has been made the chief executive officer,
and directors have been put in charge of theperformance of duties in key departments within
headquarters and business units. Under theirleadership and supervision, the corporate officers

16

appointed by the Board of Directors perform theduties delegated to them. Moreover, the directors
and corporate officers perform their duties integrated
with risk management and also discuss, decide andreport on important matters at the Board of
Directors’ meeting and the Executive Board.
At JSW, Companywide goals that are to beshared by directors, corporate officers and employees
are established at the Board of Directors’ meeting,which are incorporated in the Company’s MediumTerm Management Plan and the business plans foreach business unit. Each director and corporate
officer develops specific measures for achieving thesegoals. A division of duties is undertaken in line within-house regulations, and the specific measures areplanned and implemented. Each director andcorporate officer conducts a review of the results andprovides periodic progress reports, as well as
impromptu reports at meetings of the Board of
Directors, the Executive Board and the Management
Council. All members of the JSW management are
working to ensure impartial personnel evaluations.
6. Ensuring appropriate management conduct at
Group companies
The Company encourages its subsidiaries to follow
its Vision, Management Philosophy and Corporate
Code of Conduct, and also create their own systems
of internal controls. In addition, the Company
supports the autonomy of their management.
The Company has drafted regulations
concerning the operation and management of its
subsidiaries and has clarified the system ofmanagement responsibility and leadership for them.
At the same time, the Company is creating a system
whereby reports and notifications can be maderegarding subsidiaries’ decisions on important issues
and other matters of concern, and data can becollected. However, as listed subsidiaries, theCompany is careful to ensure a certain amount ofmanagement independence.
At JSW, directors and corporate auditors are
assigned to JSW subsidiaries. Also, to ensure oursubsidiaries’ strict adherence to all laws andregulations, as well as in-house company

regulations, we request that these companies conduct
in-house audits, both periodic and spot audits,through the departments in charge of each subsidiary,
and also by a department responsible for the internal
auditing of subsidiaries. We will also directly audit
operations and provide guidance for improving
internal controls of subsidiaries.
7. Appointing staff to assist corporate auditors, andensuring the independence thereof
The Company appoints staff from among its
employees to assist the corporate auditors in theperformance of their duties, upon request. The
opinions of the auditors themselves are sought withrespect to the appointment and dismissal of the said
staff and all other personnel-related measures such as
performance evaluation and bonuses, and no action
is taken without the auditors’ agreement, so as toensure the independence of the auditors’ assistantsfrom the influence of the directors of the Company.
8. System for submission of reports to the auditors by
the directors and employees of the Company
At JSW, corporate auditors attend the Board of
Directors, the Executive Board, the Management
Council, and other managerial meetings whereimportant matters are discussed, decided and reported.
Corporate auditors are guaranteed these opportunities.
In keeping with the ringi system, corporate
auditors are also shown the records of management
decision approval (ringisho) for their perusal.
Moreover, the auditors may request reports fromdirectors, corporate officers or employees at any timeas they deem this necessary. The timing of thesereports and the method to be used are agreed
beforehand through discussions between the auditors
and the directors, corporate officers or employees.
9. Ensuring effective performance of audits by the
corporate auditors
We provide an environment in which directors,
corporate officers and employees of the Company canrecognize the importance and benefits of audits
performed by corporate auditors, and can give thehighest priority to cooperating with auditors in theirduties as far as possible. The corporate auditors canrequest the collaboration and cooperation of theCompany’s Internal Audit Division, other head officedivisions, and all other divisions of the Company inthe performance of audits.
We provide an environment that ensures
corporate auditors collaborate closely with accounting
auditors and the Internal Audit Division.
We also provide an environment that allows
corporate auditors to employ the services of legal
advisors and other outside experts at their own
discretion.
10. System for ensuring the reliability of financial
reports
The Company follows basic internal control policies
for financial reports and evaluates the effectiveness ofinternal controls for financial reports. The Board of
Directors and the Executive Board discuss and reporton the results of those evaluations.

Policy Regarding Large-Scale
Purchases of Company Shares
By resolution of a meeting of the Board of Directors of
The Japan Steel Works, Ltd. held on September 10,
2007, the Company instituted a set of rules to beobeyed and procedures to be followed by any party
seeking to make a tender offer for the purchase of theshares issued and outstanding of the Company. These
rules and procedures were adopted under the name of
Measures against Large-Scale Share Acquisitions(Measures to Prevent Takeover). Subsequent to thisresolution, a partial amendment of these measures waspresented at the Company’s 82nd Regular General
Meeting of Shareholders held on June 27, 2008, and theagenda item was approved and updated. After that,necessary amendments were made and then approvedby shareholders at the Company’s 85th Regular General
Meeting of Shareholders held on June 24, 2011.

17

The Environment
Environmental Policy
JSW recognizes that as a responsible member of society it has an important duty to operate in harmony
with the environment. We also engage in business with the aim of contributing to the sustainable development of society in harmony with the ecosystem through production activities that respect environmental
integrity, and by developing environmental preservation technologies.
In recognition of the importance of activities in promoting environmental management, we obtained
ISO14001 certification for Muroran and Hiroshima Plants in 1998 and Yokohama plant in 2006. We havemaintained the certification to this day.

Action plan
1. We aim to carry out environmental tasks in an
organized way, and to implement environmental
preservation activities continuously.
2. We will set appropriate objectives and targets for
reducing the burden our activities impose on theenvironment with conserving biodiversity.
3. We aim to provide society with products andservices that contribute to the preservation of theenvironment.
(1) We endeavor to increase our product’s social
value to in terms of environmental protection,
safety and hygiene.
(2) We provide products and services to reduce
environmental loads by obtaining a clear grasp ofenvironmental needs and technical development.
Common policy for business facilities
Taking into consideration its business activities, thelocal community and the surrounding environment,each plant operates by setting out its own environmental policy, objectives and targets using methods
compliant with international standards.
1. Respect laws and regulations and agreements wehave concluded with external parties.
2. Prevent pollution and reduce and appropriately
treat waste, to conserve the ecosystem.

3. Improve “resource productivity” through implementation of energy efficiency, resource efficiency, andrecycling.
4. Inform employees and other companies residing
within our facilities of our policies and require theircooperation.
Environmental Management Structure
The Environmental Management Committee wasformed as a decision-making organization regarding
environmental management. The Chief Environmental
Officer serves as the chairman of this committee,
which holds meetings twice a year. Various issues
are examined at these meetings, such as proposals
concerning environmental management, policy forthe environment, and an action plan. Each plants has
its own Environmental Committee, which promotes
environmental activities and deals with other groupcompanies.

President

Environmental
Management Committee

Environmental
Supervisory Committees

Chief Environmental
Management Supervisor/
Environmental Management
Committee Chairman(Director in charge ofEnvironmental Management)

Environmental Management
Plant Supervisors(General Plant Managers)

Special Committees• Energy Saving Committees• Product Committees

Departments

18

Environmental Management
Supervisors

Affiliated companies

Medium-Term Action Plan for Environmental Management Activities (Fiscal 2009–2012)
We are promoting environmental management activities at our Muroran, Hiroshima and Yokohama plants. Social
awareness has changed greatly regarding the need to deal with such issues as the mitigation of climate change
and efficient use of resources.
We are working to attain the targets in our medium-term plan for environmental management activities covering the period from fiscal 2009 to 2012. In 2011, measures were taken at each plant to meet these targets.
With regard to the observance of laws and regulations, we implement environmental patrols at environmentalrelated facilities, plants, and other sites in the vicinity. We confirm that all environmental preservation-related laws
and regulations are being observed, and that the environmental management system is functioning properly. To
effectively communicate the results of the environmental patrols, we carry out employee training programs foraffiliates and collaborating companies, as well as at our headquarters.

Environmental Preservation Activities
The following section introduces some of JSW’s wide range of environmental preservation activities.
Reducing atmospheric emission of nickel compounds
After guideline values for nickel compounds were established by the government in September 2003 to
reduce health risks, we installed new equipment at our Muroran Plant in each relevant division including
the copper and forging division, beginning with the installation of gas cutting equipment on the plant
docks in 2004. In conjunction with this, we have taken steps to improve work, processes, and equipment,
and have nearly completed the installation of a series of equipment to improve the workplace environment of the scrap cutting plant (started up in 2010) during cutting operation. Thus far, the plant has
operated below the established limit values.
Working together with the local municipal government since 2005, we have created our own
voluntary controls and taken action. We have taken steps to reduce the amount of dust generated in theplant by installing dust collectors designed to create a better environment for the new equipment.
Safety and disaster prevention activities
We regularly implement environmental patrols at each plant to verify management status and audit data relating to specific air- and water-related facilities,
pretreatment facilities, oil-water separation tanks and other facilities.

Community contributions
As part of our social contribution activities, we conduct a cleanup campaign
along the main streets in the vicinity of our Yokohama Plant in April each year.
The cleanup campaign is conducted along roads between a nearest Stationand our Yokohama Plant’s main gate. Employees collect empty cans and pickup plastic bottles and cigarette butts. The trash is then separated and disposedof. We intend this to be an ongoing activity.

19

Board of Directors, Corporate Auditors and Executive Officers(as of June 26, 2012)

Board of Directors and Corporate Auditors

Executive Officers

Representative Director & PresidentManaging Executive Officers

Ikuo Sato

Tamotsu Hayakawa
Yutaka Mizutani
Akira Kadota
Nobuaki Shimizu

Representative Director & Executive Vice President
Hisao Iwashita

Representative Director & Senior Managing
Executive Officer
Atsushi Igarashi

Director, Senior Managing Executive Officers
Yoshitomo Tanaka
Etsuo Murai
Takao Ishido

Hiroshi Hamao
Nobuhisa Kobayashi

Executive Officers
Hiroyuki Tokushige
Shin-ichi Ono
Yasuaki Nishiyama
Hirohisa Matsuo
Kazuo Kitamura
Hiroo Akabane
Yoshinao Ishibashi
Hiroshi Fujimura
Kenji Watanabe
Yutaka Higashiizumi

Director
Hiroo Suto (Outside)

Corporate Auditors
Seiichi Uehara
Yasunori Tanita
Mamoru Kawakami (Outside)
Akira Sato (Outside)

Organization

Senior Executive Officers

Corporate Planning Office
Technology Management Center

General Meeting of Shareholders
Personnel Dept.
Secretary Office
General Affairs Dept.
Board of Directors

Finance & Accounting Dept.
Domestic Offices
Business Administration Dept.

Executive Board

President

Muroran ResearchLaboratory
Hiroshima ResearchLaboratory

Internal
Auditors Office
Board of Corporate
Auditors

20

Overseas Offices

Research & Development
Headquarters

Laser & Plasma System Office

Steel Business Division

Muroran Plant

Machinery Business Division

Hiroshima Plant

Ordnance Business Headquarters

Yokohama Plant

Financial Section
THE JAPAN STEEL WORKS, LTD.

Six-Year SummaryYears ended March 31

Millions of Yen

Consolidated

2012

2011

2010

2009

2008

2007

Net sales ...................................
Net income ................................
Total assets ...............................

¥221,368¥212,929¥201,680¥227,113¥220,851¥207,138

12,591

16,532

17,52816,034

17,484

12,515

325,653

339,263

322,986

296,909262,453

232,444

Total net assets .........................

128,613120,820

111,149

90,12585,23175,621

Amounts per share (yen):
Net income ............................

¥33.93¥44.54¥47.22¥43.19¥47.10¥33.71

Non-Consolidated

2012

2011

2010

2009

2008

2007

Net sales ...................................
Net income ................................
Total assets ...............................

¥189,329¥179,325¥175,333¥196,030¥189,318¥177,493

11,257

14,527

16,665

15,44915,878

12,233

302,550

316,176

298,783

277,301

243,433

215,693

Total net assets .........................

116,255

109,734

101,615

82,44977,95869,907¥30.33¥39.14¥44.90¥41.62¥42.77¥32.95¥10.00¥12.00¥12.00¥12.00¥12.00¥9.00

Millions of Yen

Amounts per share (yen):
Net income ............................
Cash dividends applicable tothe year ................................

Contents
21 Six-Year Summary
22 Financial Performance (Consolidated)
24 Consolidated Balance Sheets
26 Consolidated Statements of Income
27 Consolidated Statements of Comprehensive Income
28 Consolidated Statements of Changes in Net Assets
29 Consolidated Statements of Cash Flows
30 Notes to Consolidated Financial Statements
45 Independent Auditor’s Report21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 Report

45Corporate Directory
Stock Information

Corporate Data

Authorized Shares

Trade Name

1,000,000,000 shares

The Japan Steel Works, Ltd.

Issued and Outstanding Shares

Head Office371,463,036 shares
35,071Gate City Ohsaki-West Tower,
11-1, Osaki 1-chome,
Shinagawa-ku, Tokyo, Japan

Stock Listings

Foundation

Shareholders

Tokyo, Osaka, Nagoya, Fukuoka and Sapporo

November 1, 1907

Transfer Agent and Registrar

Paid-in Capital

Sumitomo Mitsui Trust Bank, Ltd.
8-4, Izumi 2-chome, Suginami-ku,
Tokyo 168-0063, Japan¥19,694 million

Employees

Major Shareholders (holding %)Auditor

The Master Trust Bank of Japan, Ltd.
(Trust Account) ..................................................... 4.67%
Japan Trustee Services Bank, Ltd.
(Trust Account) ..................................................... 4.34%
Sumitomo Mitsui Banking Corp. ............................ 3.37%
Mitsui Sumitomo Insurance Co., Ltd. ..................... 2.37%
Mitsui Life Insurance Co., Ltd. ............................... 2.27%
The Chuo Mitsui Trust & Banking Co., Ltd. ............ 2.03%
STATE STREET BANK AND TRUST COMPANY .... 1.53%
Juniper.................................................................... 1.41%
Hitachi, Ltd. ............................................................ 1.35%
Mitsubishi Heavy Industries, Ltd. ........................... 1.35%

Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.,
2-3, Uchisaiwai-cho 2-chome,
Chiyoda-ku, Tokyo, Japan

2,114 (Consolidated 4,867)(as of March 31, 2012)

JSW’s Stock Prices
Stock prices (¥)

Tokyo stock price index (TOPIX) (Points)

1,000

1,500

800

1,000

600

500

400

0
Trading volumes (Thousands of shares)

100,000

50,0000
2011/4

46

5

6

7

8

9

10

11

12

2012/1

2

3

Offices & Plants★ Japan Steel Works Europe GmbH★

Japan Steel Works India Private Limited

Japan Steel Works America, Inc.

★

★ ★ New York Office (Head Office)Detroit Office★ Head Office

JSW Machinery Trading (Shanghai) Co., Ltd.

ProfileDomestic
Head Office
Gate City Ohsaki-West Tower, 11-1, Osaki
1-chome, Shinagawa-ku, Tokyo 141-0032
Phone: +81-3-5745-2001
Facsimile: +81-3-5745-2025

Founded in 1907 in Muroran, Hokkaido — the centerof steel production in Japan — The Japan SteelWorks, Ltd. began as a joint venture with Britain’s Sir
W.G. Armstrong, Whitworth & Co., Ltd., and Vickers
Sons and Maxim, Ltd. with the goal of domestic
weapons production in Japan.
After World War II, the Company turned its sophisticated technologies and considerable experienceto the task of meeting peacetime needs. From steel
manufacturing and machinery development, to
new business fields such as automobiles, electricalequipment, information equipment, as well as heavy
industries such as electricity, steel, shipbuilding, andpetrochemicals, the Company widened its businesshorizons, and began to earn a worldwide reputation
as an integrated producer of steel materials andmanufacturer of machinery.
At present, meeting the needs of IT-relatedindustries, such as information and communication,
JSW’s global activities stretch beyond its existing
fields to encompass the development of such cuttingedge technologies as new energy, natural energy,
new materials, optics, and electronics. The Company
is also active in new fields such as environmental
businesses as a comprehensive material provider
and manufacturer of mechatronic products. Always
ahead of trends in society and industry, JSW is
preparing for sustained and vigorous growth in a wide
number of emerging areas to satisfy the demands of
its customers, shareholders and employees. In thisway JSW aims to enhance its enterprise value.

Osaka Office
Shinanobashi Mitsui Bldg., 11-7,
Utsubohonmachi 1-chome, Nishi-ku,
Osaka-shi, Osaka 550-0004
Phone: +81-6-6446-2480
Facsimile: +81-6-6446-2488
Fukuoka Office23-2, Sakuragaoka 1-chome, Kasuga-shi,
Fukuoka 816-0872
Phone: +81-92-582-8111
Facsimile: +81-92-582-8124

Contents
1
2
5
8
10
13
14
18
20
21
22
46
47

Financial Highlights (Consolidated)
Message from the President
JGP2014 – the JSW Group’s New
Medium-Term Management PlanOur Business Domains
Review of Operations
Research and Development
Corporate Governance
The Environment
Board of Directors, Corporate Auditorsand Executive Officers
Financial Section
Financial Performance (Consolidated)
Corporate Directory
Offices & Plants

Nagoya Office
Mitsui Sumitomo Kaijo Nagoya Shirakawa
Bldg., 9-15, Sakae 2-chome, Naka-ku,
Nagoya-shi, Aichi 460-0008
Phone: +81-52-222-1271
Facsimile: +81-52-222-1275
Hiroshima Office6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-0991
Facsimile: +81-82-822-0997
Sapporo OfficeKitaichijo Mitsui Bldg., 2-9,
Nishi 5-chome, Kita-ichijo, Chuo-ku,
Sapporo-shi, Hokkaido 060-0001
Phone: +81-11-241-2271
Facsimile: +81-11-241-2275

Muroran Plant
4, Chatsumachi, Muroran-shi,
Hokkaido 051-8505
Phone: +81-143-22-0143
Facsimile: +81-143-24-3440
Hiroshima Plant
6-1, Funakoshi-Minami 1-chome, Aki-ku,
Hiroshima-shi, Hiroshima 736-8602
Phone: +81-82-822-3181
Facsimile: +81-82-285-2038
Yokohama Plant
2-1, Fukuura 2-chome, Kanazawa-ku,
Yokohama-shi, Kanagawa 236-0004
Phone: +81-45-781-1111
Facsimile: +81-45-787-7200

Overseas
Japan Steel Works Europe GmbHFriedrichstr. 19, 40217 Düsseldorf,
F.R.Germany
Phone: +49-211-3116660
Facsimile: +49-211-31166640
Japan Steel Works America, Inc.
New York Office (Head Office)122 East 42nd Street, Suite 3810,
New York, NY 10168, U.S.A.
Phone: +1-212-490-2630
Facsimile: +1-212-490-2575
Detroit Office41135 Vincenti Court Novi, MI 48375 U.S.A.
Phone: +1-248-536-0288
Facsimile: +1-248-536-5615
Japan Steel Works India Private Limited
611, Time Tower, MG Road, Sector 28,
Gurgaon, Haryana, 122001, India
Phone: +91-124-469-4444
Facsimile: +91-124-469-4433

JSW Machinery Trading (Shanghai)Co., Ltd.
28A, Strength Plaza, No.600-4,
Tianshan Road, Shanghai, 200051, China
Phone: +86-21-6192-1022
Facsimile: +86-21-6192-1023
JSW Plastics Machinery, Inc.
555 South Promenade Ave., Unit 104
Corona, California 92879, U.S.A.
Phone: +1-951-898-0934
Facsimile: +1-951-898-0944
JSW Plastics Machinery (S) Pte Ltd.
17 Gul Lane, Jurong Town,
Singapore 629413, Republic of Singapore
Phone: +65-6861-4511
Facsimile: +65-6862-3166

JSW Plastics Machinery (TAIWAN) Corp.
1F., No.23, Da Hu 1st Rd., Guishan Shiang,
Taoyuan, County 33373, Taiwan, R.O.C.
Phone: +886-3-396-2102
Facsimile: +886-3-396-2104
JSW Plastics Machinery (M) SDN. BHD.
D6-5-G Block D6, Pusat Perdagangan Dana, 1
Jalan PJU 1A/46, 47301 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Phone: +60-3-7842-6076
Facsimile: +60-3-7842-6078
JSW Plastics Machinery (T) Co., Ltd.
78/6 JST Building 4th Floor, Moo7,
Kingkaew Road, Rachatewa, Bangplee,
Samutprakam 10540, Thailand
Phone: +66-2-738-5272
Facsimile: +66-2-738-5277

JSW Plastics Machinery (H.K.) Co., Ltd.
Room 907, Corporation Park, 11 On Lai
St., Shatin, N. T., Hong Kong
Phone: +852-2648-0720
Facsimile: +852-2686-8204

Forward-Looking Statements
The forward-looking statements in this annual
report reflect judgments based on information
available at the present time. Actual results
may differ widely due to various factors.

47

表2
JSW AR12表2-3

DIC 176

Y

M

C

B

表

ANNUAL REPORT 2012

Annual Report 2012
for the year ended March 31, 2012

THE JAPAN STEEL WORKS, LTD.

Printed in Japan 2012.10

表4

表
JSW AR12表1-4

DIC 176

Y

M

C

B