Financial Results for the Fiscal Year Ended October 31, 2011
[Japan GAAP] (Consolidated)
Date:

December 12, 2011

Company:

Tomoe Engineering Co., Ltd. and Subsidiaries(Web Site: http://www.tomo-e.co.jp/index_e.html)

Stock exchange listing:

1st Section, Tokyo Stock Exchange

Head Office:2-2, Osaki 1-chome, Shinagawa-ku, Tokyo, Japan

President:

Noboru Shiono

Investor Relations Contacts: Natsuhiko Maeda, Director, General Manager of Accounting Division, Tel: (03) 5435-6512
Date of Annual Shareholders Meeting: January 27, 2012
Date of Dividend Payment:

January 30 2012

Date of Financial Statement: January 27, 2012
Preparation of Supplementary Explanatory Materials for Annual Operating Results: Yes
Briefing Session for Annual Operating Results: Yes (for institutional investors)* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Results for the Year Ended October 31, 2011
(1) Results of Operation (Consolidated)(Percent: Change from the previous year)
Operating Income
Ordinary Income

Sales(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

Year Ended
42,375
9.2
2,421
11.4
October 31, 2011
Year Ended
38,816
6.9
2,173
37.1
October 31, 2010
(Note) Comprehensive income
Fiscal year ended October 31, 2011: 2,826 million yen (128.5%)
Fiscal year ended October 31, 2010: 1,237 million yen ( - %)Net Income
Net Income
Diluted Net Return on
per Share
Income per
EquityShare(Millions of Yen)

(Percent)

(Yen)

(Yen)

(Millions of Yen)

(Percent)

2,595

19.1

2,179

29.2

Return on
AssetsReturn on
Sales(Percent)(Percent)(Percent)

14.7

8.3

5.7

7.5

7.8

5.6

Year Ended
2,915
115.2
292.17
October 31, 2011
Year Ended
1,354
36.4
135.77
October 31, 2010
(Reference) Equity in earnings (loss) of unconsolidated subsidiaries and affiliates
Fiscal year ended October 31, 2011: None
Fiscal year ended October 31, 2010: None
(2) Financial Condition (Consolidated)
Total Assets (A)Net Assets (B)Net Assets Ratio (B / A)

Net Assets per Share(Millions of Yen)

(Millions of Yen)

(Percent)

(Yen)

64.5

2,113.56

62.4

1,862.30

Year Ended
32,702
21,329October 31, 2010
Year Ended
29,79918,852October 31, 2010
(Reference) Net assets
Fiscal year ended October 31, 2011: 21,090 million yen
Fiscal year ended October 31, 2010: 18,583 million yen

1(3) Cash Flows (Consolidated)
Net Cash Provided(Used) by Operating
Activities
Year Ended
1,874
October 31, 2011
Year Ended
2,182
October 31, 2010

Net Cash Provided(Used) by Investing
Activities

Net Cash Provided(Used) by Financing
Activities(Millions of yen)
Consolidated Cashand Cash Equivalent
as of Year-end

(239)

(373)

7,296

(51)

(394)

6,109

2. Dividend Status
First Quarter-

Year Ending October 31, 2010
Year Ending October 31, 2011
Year Ending October 31, 2012 (Prospect)

Dividend per Share (Yen)
SecondThird QuarterEnd ofQuarter
Fiscal Year
0.00
35.00
0.00
40.00
0.00
40.00

Total
35.00
40.00
40.00

Total Dividend

Dividend Payout Ratio(Consolidated)

Dividend on Equity Ratio(Consolidated)(Millions of Yen)

(Percent)(Percent)

349
399
-

25.8
13.7
24.0

1.9
2.0
-

Year Ending October 31, 2010
Year Ending October 31, 2011
Year Ending October 31, 2012 (Prospect)

3. Forecast for the Year Ending October 31, 2012 (Consolidated)(Percent: Change from the previous year for the full business year and 6-month period)
Sales

Operating Income

Ordinary income(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

6-month Period

23,200

5.1

1.580

(6.3)

1,590

(11.5)

Full Business Year

46,000

8.6

2,660

9.9

2,690

3.6

Net Income

Net Income per Share(Millions of Yen)

(Percent)(Yen)

6-month Period

960

(9.4)

96.20

Full Business Year

1,660

(43.1)

166.35

4. Others(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): None
(2) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: Yes
2) Other changes: None
(3) Number of outstanding shares (Common stock)1) Number of outstanding shares at year-end (including treasury stocks)
At October 31, 2011: 10,533,200 shares

At October 31, 2010: 10,533,200 shares

2) Number of treasury stocks at year-end
At October 31, 2011:

554,501 shares

At October 31, 2010:

554,418 shares

At October 31, 2010:

9,978,821 shares

3) Number of average shares
At October 31, 2011:

9,978,725 shares

2

(Reference)
1. Outline of Non-Consolidated Results of Operations for the Year Ended October 31, 2011
(1) Results of Operation (Non-consolidated)(Percent: Change from the previous year)

Sales

Operating Income

Ordinary income(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)(Millions of Yen)

(Percent)

39,822

10.6

2,166

19.4

2,407

26.3

35,992

6.1

1,813

35.3

1,905

17.9

Year Ended
October 31, 2011
Year Ended
October 31, 2010

Net Income

Net Income per Share

Diluted Net Income per Share(Millions of Yen)

(Percent)

(Yen)

(Yen)

2,830

140.4

283.62

-

1,177

21.2

117.98-Year Ended
October 31, 2010
Year Ended
October 31, 2010

(2) Financial Condition (Non-consolidated)
Total Assets (A)Net Assets (B)Net Assets Ratio (B) / (A)Net Assets per Share(Millions of Yen)

(Millions of Yen)

(Percent)(Yen)

29,36819,86867.7

1,991.07

26,68817,38465.1

1,742.15

Year Ended
October 31, 2011
Year Ended
October 31, 2010
(Reference) Net assets
Fiscal year ended October 31, 2011: 19,868 million yen
Fiscal year ended October 31, 2010: 17,384 million yen*Presentation Concerning Implementation of Audit ProceduresThis financial report is exempt from audit procedures based on the Financial Instruments and Exchange Act. At the timeof disclosure of this financial report, the Company has not completed the audit procedures for financial statements based on
the Financial Instruments and Exchange Act.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on the information
currently available to us and certain assumptions that we believe are reasonable. Actual results could differ materially due tovarious factors. For assumptions of the forecasts and necessary precautions, refer to (1) [Analysis of Results of Operation]of 1. [Operating Results and Financial Condition], on page 5.

3

Table of Contents
1. Operating Results and Financial Condition………………………………………………………………………………..5(1) Analysis of Results of Operation…………………………………………………………………………………………...5(2) Analysis of Financial Condition……………………………………………………………..……………………………...7(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2011 and 2012…………………..………………………......8(4) Risk Factors in Business………………………………….…………………………………..…………………………….8
2. Tomoe Engineering and Companies………………………………………………………..……………………………....9
3. Management Policy………………………..……………….…………………………………..……………………………12(1) Basic Management Philosophy………..…………..…….…………………………………..……………………………12(2) Target Management Indices………..…………..…….………..……………………………..……………………………12(3) Mid- and Long-term Management Strategy…..…….………..……………………………..……………………………12(4) Challenges to be Addressed…..…….………………….……..……………………………..……………………………12
4. Consolidated Financial Statements…………………………………..…………………………………………………....14(1) Balance Sheets……………………………………………………………………………………………………………...14(2) Statements of Consolidated Income and Statement of Comprehensive Income……………………………… ….16

(3) Consolidated Statements of Changes in Shareholders' Equity………..………………..……………………………19(4) Consolidated Statements of Cash Flows………………………………………………………………………………...22(5) Notes for Premise of Going Concern………………………………………..…………………………………………...24(6) Changes of Important Items to be Basis for Making Consolidated Financial Statements………………………....24(7) Notes for Consolidated Financial Statements…………………………………………………………………………..25(Consolidated Statements of Comprehensive Income)……………………………….…………………………………...25(Segment Information) ………………………………………………………………………………………………………...26(Per Share Information) ………………………………………………………………….……………………………………30(Significant subsequent events) ……………………………………………………………………………………………..30
5. Non-Consolidated Financial Statements……………………..…………………………………………………………...31(1) Balance Sheets……………………………………………………………………………………………………………...31(2) Statements of Income……………………………………………………………………………………………………....35(3) Statements of Changes in Shareholders' Equity………………………………………………………………………..37(4) Notes for Premise of Going Concern…………………………..………………………………………………………...40(5) Notes for Non-Consolidated Financial Statements……………………………………………………………………..40(Per Share Information) ……………………………………………………………….……………………………………....40
6. Other Notes…………………………………………………………………………………………………………………..41(1) Appointment of Officers……………………………………………….…………………………………………………..414

1. Operating Results and Financial Condition(1) Analysis of Results of Operation[1] General condition of the current consolidated fiscal year
General operating results
During the consolidated fiscal year, production and exports fell sharply as a result of supply chain disruptions andthe effects of electric power shortages in the aftermath of the Tohoku Pacific Offshore Earthquake that struck in
March 2011, and Japan’s economy was hampered by conditions that considerably undermined the economic
recovery that had been underway until the earthquake. Aided by the progress in restoring supply chains, however,which proceeded more quickly than anticipated immediately after the earthquake, and by factors such as efforts
undertaken immediately by the industrial sector to compensate for power shortages, the recovery trends inproduction, exports and personal consumption levels as a whole were sustained despite lingering concerns
generated by the financial and economic climate in Europe, the U.S. and China and the appreciation of the yen.
Under such circumstances, the consolidated net sales of the Tomoe Engineering Group were 42,375 million yen,
9.2% up compared with the previous consolidated fiscal year, against the backdrop of growth in sales of centrifuge
equipment for oil drilling in North America and parts and repairs for Japan’s private sector demand in the Machinery& Equipment Business, and improved supply and demand for industrial materials, advanced materials and finechemicals and the effect of new commercial products in the Chemical Products Business. Although some
restrictions were placed on procurement of certain components and sales activities in the Machinery & Equipment
Business as a result of the earthquake, the effect was limited as a whole, while the occurrence of extensive
front-loaded demand and substitute demand in the Chemical Products Business had the effect of pushing up net
sales as a whole somewhat throughout the consolidated fiscal year.
From an earnings perspective, consolidated operating income for the Tomoe Engineering Group improved more
rapidly than the expansion in net sales and was 11.4% up from the previous consolidated fiscal year, to 2,421 million
yen. Although gross profit margins in both of the Group’s businesses contracted marginally compared with the priorfiscal year because of several unique factors, increases in selling, general and administrative expenses, beginningwith personnel expenses, were stringently controlled. Another factor that helped improve earnings was a gain on
valuation of derivatives related to the Chemical Products Business. As a result, ordinary income also exceeded theprior fiscal year level and was up 19.1%, to 2,595 million yen. Net income for the current consolidated fiscal year
was 2,915 million yen, 115.2% up compared with the previous year, reflecting a gain on conversion of fixed assets
rights of 2,444 million yen, which we reported in extraordinary income, in conjunction with the conversion of property
rights to the Company’s former Tokyo factory based on a district redevelopment project.
Machinery & Equipment BusinessIn the Machinery & Equipment Business, consolidated net sales were 12,480 million yen, 8.3% up from theprevious year. Although domestic sales of machinery and equipment were basically flat, sales of centrifuge
equipment for oil well drilling in North America, components sales and repair service for domestic private sector
demand and works related to domestic public sector demand were all higher. Among these, the contribution from
centrifuge equipment for oil drilling in North America was especially large, accounting for 164.9% of the growth rate
in net sales in that business. Sales of abrasive grain slurry recycling equipment used for manufacturing photovoltaic
cells, and centrifuge equipment for vinyl chloride plants in China, which supported overseas net sales through theprevious year, remained somewhat weak throughout the fiscal year. Parts procurement and business operations
experienced some restrictions for a certain period of time following the March 11 earthquake, but the effect of theseon net sales was limited. Furthermore, in terms of earnings, the gross profit margin declined slightly as a reaction to
the especially high-profit margin sales for a domestic large-scale repair project involving heavily depleted equipment

5

that were included in the previous year’s net sales. Because we tightly controlled selling, general and administrative
expenses including personnel expenses, however, consolidated operating income rose faster than the growth rate
in net sales and reached 1,114 million yen, 16.1% up compared with the previous consolidated fiscal year.
Chemical Products BusinessIn the Chemical Products Business, sales rose despite the clear loss of some commercial distribution activities
related to the plastic compounding business in Shenzhen, China and a slackening demand domestically inconsumable goods for use of semiconductor manufacturing, as supply and demand related to other domestic
sectors continued to improve, especially for items used in the residential housing and construction industry
segments. As a result, consolidated net sales were 29,894 million yen, up 9.5% from the previous fiscal year, withindustrial materials, advanced materials and fine chemicals all serving as growth drivers. This included expanded
sales of new commercial products, which also gradually increased their contribution to higher revenues in theadvanced materials and fine chemicals sectors. As a result of the earthquake, this business experienced small
losses, including lower sales of products for automobiles and the scrapping and write-off of some inventory assets.
The effect was limited, however, and the subsequent occurrence of front-loaded and substitute demand for a wide
range of commercial products helped to push up net sales somewhat throughout the consolidated fiscal year. Froma business earnings standpoint, the slowdown phase affecting operations in Shenzhen, China intensified gradually
and affected the gross profit margin, which fell slightly. Nevertheless, because increases in selling, general andadministrative expenses were capped, beginning with personnel expenses, consolidated operating income rose
7.7% from the previous fiscal year to 1,306 million yen.
[2] Outlook for the next fiscal year (November 1, 2011 - October 31, 2012)
Turning to the consolidated fiscal year ending in October 2012, as in the prior year Japan’s economy is forecast tocontinue its search for ways to sustain its recovery in the face of several concerns, including the financial andeconomic climate in Europe, the United States and China and the persistent strength of the yen, by usingdevelopments such as the recovery of production in the automobile sector and a high level of post-earthquake
reconstruction demand as footholds.
Given such circumstances, in the Tomoe Engineering Group’s Machinery & Equipment Business we plan tocontinue expanding sales of machinery and parts in overseas markets, including centrifuge equipment for oil welldrilling, and increasing domestic sales, and we project fiscal year consolidated net sales of 13,700 million yen (9.8%
up compared with the previous year) and operating income of 1,325 million yen (18.8% up compared with theprevious year). In the Chemical Products Business as well, we will work to expand domestic sales of existing andnew commercial products in the industrial materials and fine chemicals sectors, and we plan to leverage our plastic
compounding business in China by incorporating new commercial distribution and other measures. In this business
we project fiscal year net sales of 32,300 million yen (8.0% up compared with the previous year) and operating
income of 1,335 million yen (2.2% up compared with the previous year).
As a result of these efforts, for the entire Tomoe Engineering Group in the consolidated fiscal year ending October
2012 we project net sales to grow by 8.6% to 46,000 million yen and operating income to increase 9.9% to 2,660
million yen. In conjunction with this growth, we project ordinary income for the fiscal year to increase by 3.6% to2,690 million yen, which also partially reflects the fact we have reported a one-time loss on valuation of derivatives in
the current consolidated fiscal year, and in the absence of the one-time gain on conversion of fixed assets rights
reported in the current fiscal year, we project net income will fall by 43.1% to 1,660 million yen.
The operating results forecasts for the next period described above are based on information available to theCompany at the time the forecasts were prepared and assumptions judged to be reasonable. Actual operating
results might differ from these forecasts depending upon domestic and international financial and economic
conditions, the supply and demand situation and various other unpredictable, abrupt changes in circumstances.

6

(2) Analysis of Financial Condition[1] Total Assets, Liabilities, and Net Assets
Total assets at the end of the current consolidated fiscal year were 32,702 million yen, up 2,923 million yen or 9.8%
from the balance at the end of the previous consolidated fiscal year (October 31, 2010). This was the result of anincrease in current assets that reflected growth in cash and deposits against the backdrop of higher sales andearnings and some growth in inventories related to the Chemical Products Business and other assets, as well as
the realization of latent assets in conjunction with the conversion of property rights at the site of our former Tokyo
factory.
Total liabilities, on the other hand, rose 4.1% compared with the end of the previous consolidated fiscal year to
11,372 million yen. Although current liabilities were slightly lower because of a decrease in income taxes payable,
noncurrent liabilities were substantially higher, because of a deferred tax liability of 994 million yen related to thelatent assets at our former Tokyo factory.
The total balance for net assets increased 13.1% or 2,477 million yen compared with the end of the previous
consolidated fiscal year to 21,329 million yen, as retained earnings increased significantly because the gain on
conversion of fixed assets rights related to the conversion of property rights at the site of our former Tokyo factory,
excluding the tax effect amount, was still positive and was added to the net income from both businesses.
Because the growth rate for net assets exceeded the rate for liabilities as total assets expanded as discussed above,the equity ratio at the end of the current consolidated fiscal year rose by 2.1 percentage points from the end of theprevious consolidated fiscal year, climbing from 62.4% to 64.5%.
[2] Cash Flow Status
Balance of cash and cash equivalent as of the end of the current consolidated fiscal year increased by 1,187 million
yen to 7,296 million yen from the previous consolidated fiscal year. Status of each cash flow and their factors during
the current consolidated fiscal year are as follows:(Net Cash Provided by (Used in) Operating Activities)
Although the gain on conversion of fixed assets rights was 2,444 million yen and income taxes paid reached 1,511
million yen, because income before income taxes and minority interests was 5,007 million yen, and notes andaccounts receivable-trade also decreased by 781 million yen, the total amount reported as income was 1,874
million yen.
(Net Cash Provided by (Used in) Investing Activities)
Because amounts for expenditures such as purchases of property, plant and equipment including buildings andstructures and intangible fixed assets exceeded amounts for items such as proceeds from sales of investment
securities, the net amount of expenditures totaled 239 million yen.
(Net Cash Provided by (Used in) Financing Activities)
Net cash used in financing activities was 373 million yen in total because of lease obligations payment in additionof cash dividends of 349 million yen. Note trends in cash flow indices below.
Trends in cash flow indices are as follows:

Equity Ratio (Percent)Year EndedYear EndedYear EndedYear EndedYear Ended

October 31,

October 31,

October 31,

October 31,

October 31,

2007

2008

2009

2010

2011

51.8

58.8

66.8

62.4

64.5

7

Equity Ratio Based on
Market Value (Percent)

47.4

30.9

51.8

38.6

42.5

-

0.3

0.2

0.3

0.3

-

86.9

88.8

151.7

258.7

Debt-repayment to Cash
Flow Ratio (Years)
Interest Coverage Ratio(Percent)

Equity ratio: Net assets / Total assets
Equity ratio based on market value: Market capitalization of shares / Total assets
Debt-repayment to cash flow ratio: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest payment(Note)
1. All indices are calculated on the basis of consolidated financial figures.
2. Market capitalization is calculated based on the number of outstanding shares excluding treasury stock.
3. Cash flow refers to net cash provided by (used in) operating activities.
4. Interest-bearing debt refers to all debt reported on the consolidated balance sheet for which interest is being
paid.
(3) Basic Policy for Profit Sharing and Dividends for Fiscal 2011 and 2012
Our company’s approach to the return of profits to our important shareholders is based on our stated policy to “maintainstability in dividends payment with a target consolidated payout ratio of 25% or more, by considering earnings,
reinforcement of our corporate base and other factors in a comprehensive manner.”
Based on the above policy, we plan to submit to the 82nd General Meeting of Shareholders to be held in January 2012a resolution to pay out dividends of 40 yen per share for the fiscal year ended on October 31, 2011. In addition to ourregular dividend of 35 yen per share, identical to the dividend for the previous fiscal year, we plan to separately pay acommemorative dividend of 5 yen per share in recognition of the 70th anniversary of the Company’s founding.
Dividends for the fiscal year ending on October 31, 2012 will be 40 yen per share. This will be an increase of 5 yen per
share compared with the ordinary dividend per share for the fiscal year ended on October 31, 2011, considering thebusiness outlook for the entire fiscal year and factors such as the projected change in our financial position.
(4) Risk Factors in Business
The key areas of business risks of our group that might have significant influence on investors’ decision are as follows.
The following judgments are made based on the business information at the end of the current consolidated fiscal year,
although some forward-looking statements are contained.
[1] Seasonal Fluctuation of Operating Results
Currently there is a seasonal bias in sales and profits of our group toward the second quarter. This is because thatpublic sector sales account for relatively a high percentage in the sales of Machinery & Equipment Business andtend to be concentrated in the second quarter due to public sector's budget implementation.
[2] Influence of Foreign Exchange Fluctuation
Businesses of our group include exports and import in foreign currencies, and exchange rate fluctuations may affectthe values after translation into yen. Operating results and financial condition of our group might be affected by therange of foreign exchange fluctuation although we make efforts to minimize exchange fluctuation risks by entering

8into forward exchange contracts. Since our group has overseas subsidiaries, we prepare financial statements inforeign currencies. In preparing consolidated financial statements, there is a risk associated with exchange
fluctuation when converting into yen equivalent.
[3] Potential Risk of Overseas Activities
Our group is engaged in marketing and manufacturing overseas, focusing on China and other Southeast Asian
countries. Our group will monitor the local situations with the greatest care and take appropriate actions on a timely
basis. However, our group’s operating results and financial condition might be affected by unforeseen circumstances
arising from local political conditions, governments, legal restrictions, taxation systems, customs, etc.
[4] Risk Associated with Quality of Goods and Products
The products of our group are manufactured by paying due attention based on systematic quality control. The
products that require technical development might cause risk of having cost of repair and replacement. Also, since
our group is not directly involved in manufacturing of many of imported raw materials, defects that our group is notdirectly associated with may occur and we might be obligated to cease sales and collect such materials. Although
we are prepared to take prompt and appropriate actions to cope with the risks involved in quality of manufactured
products and commercial goods, it may affect our group’s operating results and financial condition to the extent of
the problem.
[5] Risks of New Investment
Our group is in a quest to pursue high-value-added business all the time. To do this, we must take measures suchas aggressive investment and acquisition of trade rights in some situations; however, these measures may involve
higher potential risks than conventional business risks. Even though we take such sufficient preparations andmeasures, some unexpected events may result in affecting operating results and financial condition of our group.

2. Tomoe Engineering and Companies
Tomoe Group consists of Tomoe Engineering and its nine subsidiaries. The group is mainly engaged in manufacture anddistribution of centrifuges and trading of chemical products. Business activities of the group are divided into the following
three main categories. “Business Segments,” which will be discussed in a later section, are based on the following businessactivity segments. Since “other businesses” involve no consolidated subsidiary, “Business Segments” do not include figures
related to them.
Machinery & Equipment Business:
Tomoe Engineering manufactures and distributes centrifuges. Its subsidiary Tomoe Machinery Service provides
centrifuge users with after-sales services as well as parts. Its subsidiary Tomoe Machinery undertakes machining andsheet-metal processing of centrifuge. Tomoe Engineering consigns manufacture of the centrifuges and the after-sales
service to its subsidiary Tomoe Engineering (Shanghai).
Chemical Products Business:
Interstella Plastics (Shenzhen) and Stella Tech Engineering Plastics (Shenzhen) are engaged in coloring andcompounding of plastic materials. Our affiliate, Interstella is an investing company of Stella Tech Engineering Plastics(Shenzhen) and also serves as a contact for purchasing and sales. Tomoe (Hong Kong) is functioning as central corefor sales activity in China in Tomoe Group. Tomoe Wine & Spirits distributes wines and spirits imported by Tomoe
Engineering.

9

Other Businesses:
Tomoe Butsuryu subcontracts with our company for products’ transportation and warehousing.
Schematic diagram of Tomoe’s operation is on the next page.

10

(◎: Consolidated subsidiaries)

Products sale

Tomoe Butsuryu(Subsidiary)
Logistics & warehousingof our products

materials

Products sale◎Interstella Plastics(Shenzhen)(Subsidiary)
Plastic coloring and compounding

Chemical Products BusinessTomoe Engineering Co., Ltd.

Subcontracting

Purchase of

Machinery & Equipment Business

11

Logistics & warehousing

Products sale

Purchase of products◎Interstella (Subsidiary)
Purchase of plastic materials & sale

Products sale

Purchase of products

Tomoe Wine &Spirits(Subsidiary)
Sale of imported wines

Products sale

Products sale
Products sale

Purchase of parts

Purchase of materials◎Tomoe (Hong Kong)(Subsidiary)
Purchase & sale of chemical industry products

Products sale

Manufacturingconsignment & parts sale

Products sale

Purchase of products◎ Stella-Tech Engineering Plastics(Shenzhen)(Subsidiary)
Plastic coloring & compounding◎Tomoe Machinery(Subsidiary)
Sheet metal processing &machining◎Tomoe Engineering(Shanghai) (Subsidiary)
Manufacturing, sale &after-sale services of our
products
Maintenance of delivered
products

Parts sale

Maintenance of delivered products◎Tomoe Machinery
Service(Subsidiary)
After-sale services &parts sale of our products

After-sale services& products sale

After-sale services& parts sale

Customers

3. Management Policy(1) Basic Management Philosophy
Our basic management philosophy is to contribute to society and provide a good quality of life to people involved
through growth and development of our company with spirit of creation and entrepreneurship and to provide ourcustomers with high level of technologies and excellent products. Guided by this policy, we shall be engaged in
the manufacture and sale of machinery based primarily on solid-liquid separation techniques and importation ofunique and specialty raw materials for chemical industry.
(2) Target Management Indices
Rather than just aiming for a volume growth, in our Machinery & Equipment Business we always try to develop
and sell products that require specialized technology, while in our Chemical Products Business we seek to handle
unique, high value-added products that demand expertise, even if their market is not so large. To pursue thesegoals, we regard improvement of profitability as our primary management goal. As a management indicator formeeting these goals, we give highest priority to ordinary income, which directly expresses the nature and changeof profitability.
(3) Mid- and Long-term Management Strategy
The long-term management strategy of Machinery & Equipment Business is to develop new products, reduce
manufacturing cost, and develop overseas markets, and that of Chemical Products Business is to discover unique
new commercial products to expand business in China.
To achieve continuous progress on our basic strategy, in September 2010 we formulated the Ninth Mid-termManagement Plan “Tomoe 525” (from November 1, 2010 to October 31, 2013). The plan is devoted mainly
to implementing measures based on the following policies after newly identifying the ideal approach toallocating management resources and capturing market share. In the Machinery & Equipment Business, wewill expand foreign sales centered on China and the United States, while increasing domestic sales of our
low-power, energy-saving centrifuge models. In the Chemical Products Business we will launch attractive newcommercial products in cooperation with new, leading suppliers and strengthen our domestic and overseas plastic
business, including our compounds business in Shenzhen, China. As our objective when pursuing these goals,
we will seek to achieve consolidated net sales of 50,000 million yen and ordinary income of 2,500 million yen in thefiscal year ending October 2013, the final year of our mid-term management planning period. Since the close of
the first year of the plan, we have focused on achieving each year’s consolidated net sales, while continuing tostudy appropriate upward revisions of our consolidated ordinary income target in particular, based on the rolling
results achieved in each fiscal year.
The Tohoku Pacific Offshore Earthquake that occurred in March 2011 is expected to have various effects on both
the Machinery & Equipment Business and Chemical Products Business of the Tomoe Engineering Group in the
future. When viewed over the medium-term, however, the overall negative impact is not expected to be great, andbased on this point we have not revised the management concepts and operating plan laid out in our Ninth
Mid-term Management Plan “Tomoe 525”, which the Tomoe Engineering Group has been following so far.
(4) Challenges to be addressed
Given factors such as the escalation of competition between countries and region as the newly developing
countries that are driving the global economy are transformed into advanced countries, eliminating the
supply-demand gap in Japan is expected to require an even longer time. Moreover, as industry-related conditions12

we cannot afford to ignore the spread of the open bidding system pertaining to public demand in the Machinery &Equipment Business, or the ongoing overseas shift of end users in our Chemical Products Business. Therefore
we consider an appropriate response to changes in the business environment to be a priority issue, and we haveformulated our Ninth Mid-term Management Plan aimed at further strengthening our market competitivenessdomestically and developing new markets in other countries. Our policy in the future will remained focused on
implementing management measures based on this plan, and achieving sustained growth and increasing stableearning capacity in both of our businesses.
To enhance and strengthen corporate governance and compliance we have established a Corporate Ethics
Committee, and in the future this committee will take the lead in efforts to ensure management in full compliancewith the letter and spirit of the law and improve corporate ethics. Moreover, from the view point of corporate
governance, we plan to maintain our efforts to firmly establish wide-ranging risk management centered on our
Risk Management Committee, and to pursue the consolidation of our management environment from an IT
perspective by undertaking construction of our next-generation mission-critical systems.

13

4. Consolidated Financial Statements(1) Balance Sheets
Year Ended October 31, 2010

Year Ended October 31, 2011

Cash and Deposits

6,109,100

7,296,554

Notes and Accounts Receivable-Trade

13,324,042

12,478,424

Merchandise and Finished Goods

3,055,662

3,506,696

Work in Process

1,400,107

1,029,443

Raw Materials and Supplies

404,117630,324Deferred Tax Assets

618,454634,782

Others

164,937

236,706(29,006)
25,047,414(21,322)
25,791,609

2,527,155

2,328,168

Accumulated Depreciation(1,505,179)(1,344,589)

Buildings and Structures, Net

1,021,976

983,579

Machinery, Equipment and Vehicles

3,435,773

3,395,764(2,623,977)(2,662,256)

811,796

733,508Land

970,253922,024

Lease Assets

76,962

71,702

Accumulated Depreciation(39,169)(52,851)

Lease Assets, Net

37,79318,85002,545,240

986,860

990,168(895,734)(924,338)

91,126

65,8302,932,946

5,269,032

80,24565,585Investment Securities

697,362

665,846

Guarantee Deposits

412,798364,657

Deferred Tax Assets

87,04333,143

Others602,102591,086

Allowance for Doubtful Accounts(80,377)(78,405)

Total Investments and Other Assets

1,718,929

1,576,328

Total Noncurrent Assets

4,732,121

6,910,947

Total Assets

29,779,536

32,702,557

AssetsCurrent Assets

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, Net

Construction in progress
Others
Accumulated Depreciation
Others, Net
Total Property, Plant and Equipment
Intangible Assets
Investments and Other Assets

14

Year Ended October 31, 2010

Year Ended October 31, 2011

6,477,307

6,485,604

Short-Term Loans Payable

585,923

534,045

Lease Obligations

24,132

14,556

Accounts Payable-Others

551,681

577,728

Income Taxes Payable

961,213555,402

Advances Received

417,875

461,243

Provision for Bonuses

1,111,306

1,084,618

Provision for Directors' Bonuses

85,555

61,776

Allowance for Product Warranty

186,442

281,546

Others327,562

270,113

10,729,000

10,326,636

Liabilities and Net Assets
Liabilities
Current Liabilities
Notes and Accounts Payable-Trade

Total Current Liabilities
Noncurrent Liabilities
Lease Obligations

22,553

7,992

Provision for Retirement Benefits

32,53836,745

Provision for Directors' Retirement Benefits

142,760

31,760108

969,595

Total Noncurrent Liabilities

197,960

1,046,093

Total Liabilities

10,926,961

11,372,730

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410

1,483,410

Retained Earnings

16,613,067

19,179,264

Treasury Stock(363,194)(363,319)

18,794,492

21,360,564

Valuation and Translation Adjustments
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

53,58551,626(7,411)230

Foreign Currency Translation Adjustment(257,190)(321,821)

Total Valuation and Translation Adjustments(211,016)(269,965)

269,098239,227

Total Net Assets

18,852,575

21,329,827

Total Liabilities and Net Assets

29,779,536

32,702,557

Deferred Tax Liabilities

Net Assets
Shareholders’ Equity

Total Shareholders’ Equity

Minority Interests15(2) Statements of Consolidated Income(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

Net Sales

38,816,975

42,375,003

Cost of Sales

30,479,260

33,593,611

8,337,714

8,781,392

6,164,689

6,360,127

2,173,024

2,421,264

Interest income

6,790

11,131Dividends Income

15,14822,012Rent Income

16,85012,089Foreign Exchange Gains

52,54200137,398

42,23435,204

133,566

217,836

7,911

7,244

75

71

10,0089,975

012,084

Loss on Valuation of Derivatives

93,4960

Others15,976

14,338

Total Non-Operating Expenses

127,469

43,714

Ordinary Income

2,179,121

2,595,386

Gain on Sales of Noncurrent Assets

0

8,294

Gain on conversion of fixed asset rights

02,444,103

Gain on Sales of Investment Securities

159,344

14,190

Reversal of Allowance for Doubtful Accounts

13,207

17,503

Total Extraordinary Income

172,552

2,484,092

Loss on Retirement of Noncurrent Assets

5,229

8,327

Loss on Sales of Investment Securities466

0

120,049

33,546

420

1,650

0

28,715Gross Profit
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Gain on Valuation of Derivatives
OthersTotal Non-Operating Income
Non-Operating Expenses
Interest Expenses
Loss on Sales of Notes Payable
Commission Paid
Foreign Exchange Loss

Extraordinary Income

Extraordinary Losses

Loss on Valuation of Investment Securities
Provision of Allowance for Doubtful Accounts
Loss on adjustment for changes of accounting
standard for asset retirement obligations

16

Total Extraordinary Losses

126,165

72,239

Income before Income Taxes and Minority Interests

2,225,508

5,007,239

Income Taxes-Current

1,142,975

1,108,742

Income Taxes-Deferred(285,752)

1,005,822

857,222

2,114,565

02,892,673

13,428(22,780)

1,354,856

2,915,454

Total Income Taxes
Income before minority interests
Minority Interests Income
Net Income

17Consolidated Statements of Comprehensive Income(Thousands of yen)

Income before minority interests

Year Ended October 31,

Year Ended October 31,

2010

2011
0

2,892,673

Valuation difference on available-for-sale securities

0(1,958)Deferred Gains or Losses on Hedges

0

7,641

Foreign Currency Translation Adjustment

0(71,721)

Total other comprehensive income

0*2(66,038)0*12,826,635

Other comprehensive income

Comprehensive income(Breakdown)Comprehensive income attributable to owners of theparentComprehensive income attributable to minority
interests

18

02,856,506

0(29,871)(3) Consolidated Statements of Changes in Shareholders' Equity(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

1,061,210

1,061,210

001,061,210

1,061,210

1,483,410

1,483,410

001,483,410

1,483,410

15,557,577

16,613,067

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,354,856

2,915,454

Total Amount Changed

1,055,489

2,566,197

Surplus during This Fiscal Year

16,613,067

19,179,264(363,045)(363,194)

Issued Shares Reacquired

(148)

(125)

Total Amount Changed

(148)

(125)

(363,194)(363,319)

17,739,152

18,794,492

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,354,856

2,915,454

(148)

(125)

Total Amount Changed

1,055,340

2,566,071

Surplus during This Fiscal Year

18,794,492

21,360,564

Shareholders' Equity
Common Stock
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Capital Surplus
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Retained Earnings
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Surplus During Previous Fiscal Year
Changes During This Fiscal Year

Surplus during This Fiscal Year
Total Shareholders’ Equity
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired19

(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

77,74953,585(Except Shareholders' Equity)(24,164)(1,958)Changes during This Fiscal Year

(24,164)(1,958)53,58551,626(712)(7,411)(Except Shareholders' Equity)(6,699)7,641

Changes during This Fiscal Year

(6,699)7,641(7,411)

230(173,790)(257,190)(Except Shareholders' Equity)(83,399)(64,631)

Changes during This Fiscal Year

(83,399)(64,631)(257,190)(321,821)(96,753)(211,016)(Except Shareholders' Equity)(114,262)(58,948)

Changes during This Fiscal Year(114,262)(58,948)(211,016)(269,965)

279,145

269,098(Except Shareholders' Equity)(10,046)(29,871)

Changes during This Fiscal Year

(10,046)(29,871)

269,098239,227

Revaluation and Translation Adjustments
Valuation Difference on Available-for-sale
Securities
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Deferred Gains or Losses on Hedges
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Foreign Currency Translation Adjustment
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Total Revaluation and Translation Adjustments
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Minority Interests
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year20

(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

17,921,544

18,852,575

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,354,856

2,915,454

(148)

(125)

(Except Shareholders' Equity)(124,309)(88,819)

Total Amount Changed

931,030

2,477,252

Surplus during This Fiscal Year

18,852,575

21,329,827

Total Net Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Total (Net) Amount Changed21

(4) Consolidated Statements of Cash Flows(Thousands of yen)
Year EndedYear Ended

October 31, 2010

October 31, 2011

Net Cash Provided by (Used in) Operating Activities
Income before Income Taxes and Minority Interests

2,225,508

5,007,239

Depreciation and Amortization

396,574

379,736

Increase (Decrease) in Provision for Bonuses

321,002(25,056)

Increase (Decrease) in Provision for Directors' Bonuses

37,084(23,778)

Increase (Decrease) in Allowance for Product Warranty
Increase (Decrease) in Provision for Retirement Benefits

31,444
3,578

95,1044,416

0(111,000)

Increase (Decrease) in Allowance for Doubtful Accounts(16,795)(9,655)Interests and Dividends Income(21,939)(33,144)

Interest Expenses

7,911

7,244

Foreign Exchange Losses (Gains)

18,307

11,203

Loss (Gain) on Valuation of Investment Securities

120,049

33,546

Loss (Gain) on Valuation of Derivatives

93,496(137,398)(158,878)(14,190)

Loss (Gain) on Sales of Noncurrent Assets

0(8,294)

Loss on Retirement of Noncurrent Assets

5,229

8,327

0

(2,444,103)

028,715(1,446,405)

781,796

Decrease (Increase) in Inventories(619,322)(337,740)

Increase (Decrease) in Notes and Accounts Payable-Trade

1,151,232

58,628

Increase (Decrease) in Accounts Payable-Others

104,518

9,773

Increase (Decrease) in Advances Received

176,736

46,535

Increase (Decrease) in Accrued Consumption Taxes(93,512)

19,820

Others, Net(148,507)

15,0082,187,314

3,362,734

Interests and Dividends Income Received

21,92030,047

Interest Expenses Paid

(14,383)(7,244)

Income Taxes Paid

(12,590)(1,511,506)

2,182,261

1,874,031

Increase (Decrease) in Provision for Directors' Retirement Benefits

Loss (Gain) on Sales of Investment Securities

Gain on conversion of fixed asset rights
Loss on adjustment for changes of accounting standard for
asset retirement obligations
Decrease (Increase) in Notes and Accounts
Receivable-Trade

Sub total

Net Cash Provided by (Used in) Operating Activities

22

(Thousands of yen)
Year EndedYear Ended

October 31, 2010

October 31, 2010

Net Cash Provided by (Used in) Investment Activities
Disbursement to Time Deposits(2,378,526)(2,520,110)

Proceeds from Withdrawal of Time Deposits

2,378,526

2,520,110

Purchase of Property, Plant and Equipment(203,405)(275,337)

25

23,231

Purchase of Intangible Fixed Assets(48,066)(6,842)

Purchase of Investment Securities(14,102)(17,869)

Proceeds from Sales of Investment Securities

218,683

23,425

Collection of Loans Receivable

2,822

4,800

Payments of Loans Receivable(3,925)(1,720)

Guarantee Deposits (Increase)(3,632)

11,002

(370)

(553)

(51,972)(239,863)

Repayments of Lease Obligations(28,107)(24,137)

Repayment of Long-Term Loans Payable(60,000)

0

(148)

(125)

(299,367)(349,257)(6,740)0)(394,363)(373,520)

Equivalents(74,618)(73,192)

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period

1,661,307

1,187,454

4,447,793

6,109,100

Cash and Cash Equivalents at End of This Fiscal Year

6,109,100

7,296,554

Proceeds from Sales of Property, Plant and Equipment

Others, Net
Net Cash Provided by (Used in) Investment Activities
Net Cash Provided by (Used in) Financing Activities

Purchase of Treasury Stock
Cash Dividends Paid
Cash Dividends Paid to Minority Shareholders
Net Cash Provided by (Used in) Financing Activities
Cash and Cash Equivalents
Effect of Exchange Rate Change on Cash and Cash23

(5) Notes for Premise of Going Concern
None.
(6) Changes of Important Items to be Basis for Making Consolidated Financial Statements[Changes of Accounting Policy]
Current consolidated fiscal year
(Year Ended October 31, 2011)
Application of the “Accounting Standard for Asset Retirement Obligations”
Beginning from the current consolidated fiscal year, the Company has adopted the “Accounting Standard for Asset
Retirement Obligations” (Accounting Standards Board of Japan Statement No. 18 dated March 31, 2008 and the“Guidance on Accounting Standard for Asset Retirement Obligations” (Accounting Standards Board of Japan
Guidance No. 21 dated March 31, 2008).
As a result of this change, operating income and ordinary income were 7,042,000 yen lower, and income before
income taxes and minority interests was 35,757,000 yen lower, than what they otherwise would have been had theaccounting standard used in previous consolidated fiscal years been applied.

[Changes in reporting methods]
Current consolidated fiscal year
(Year Ended October 31, 2011)(Change related to the Consolidated Balance Sheets)
Until the previous consolidated accounting fiscal year, the Company reported “construction in progress” (11,361,000 yen in
the prior consolidated fiscal year yen) in “Other non-current accounts” under property, plant and equipment. Beginningfrom the current consolidated fiscal year, the Company has reported this item separately because the amount exceeded
1/100 of the amount of total assets.
(Change related to the Consolidated Statements of Income)
Beginning from the current consolidated fiscal year, the Company will apply the Cabinet Office Ordinance Partially
Revising the Regulations for Terminology, Formats and Preparation Methods of Financial Statements (Cabinet Ordinance
No. 5 dated March 24, 2009), based on “Accounting Standard for Consolidated Financial Statements” (AccountingStandards Board of Japan Statement No. 22 dated December 26, 2008) and has disclosed the line item “income before
adjustment for minority interests (loss)”[Additional Information]
Current consolidated fiscal year
(Year Ended October 31, 2011)
Application of “Accounting Standard for Presentation of Comprehensive Income”
Beginning from the current consolidated fiscal year, the Company has adopted “Accounting Standard for Presentation ofComprehensive Income” (Accounting Standards Board of Japan Statement No. 25 dated June 30, 2010). However, theprior consolidated fiscal year amounts for “Accumulated other comprehensive income” and “Total accumulated othercomprehensive income” are reported in the amounts shown for “Valuation and translation adjustments” and “Total
valuation and translation adjustments.”24

(7) Notes for Consolidated Financial Statements(Change related to the Consolidated Statements of Comprehensive Income)Current consolidated fiscal year (From November 1, 2010 to October 31, 2011)
Note 1 Comprehensive income in the consolidated fiscal year immediately preceding the current consolidated fiscal year
Comprehensive income attributable to owners of the parent (thousand yen)Comprehensive income attributable to minority interests (thousand yen)
Total (thousand yen)

1,240,593(3,306)
1,237,286

Note 2 Other comprehensive income in the consolidated fiscal year immediately preceding the current consolidated
fiscal year
Valuation difference on other investment securities (thousand yen)

(24,164)

Deferred gains or losses on hedges (thousand yen)

(6,699)Translation adjustments account (thousand yen)

(100,134)

Total (thousand yen)

(130,998)

25

(Segment Information)
Segment by type of businessYear Ended October 31, 2010
Machinery &Equipment
Business
I. Sales and Operating Income:Sales(1) Sales to UnaffiliatedCustomers(2) Internal Sales Among
Segments or AmountTransferred
Total
Operating Costs
Operating Income
II. Assets, Depreciation Costs,
Impairment Loss and Capital
Expenditures:
AssetsDepreciation Costs
Capital Expenditures(Thousands of yen)
Deletion or
Consolidated
Total
Company

Chemical
Products
Business

Total

11,522,802

27,294,172

38,816,975

0

38,816,975

0
11,522,802
10,562,394
960,4070
27,294,172
26,081,556
1,212,616

038,816,975
36,643,950
2,173,024

0
0
0
0

0
38,816,975
36,643,950
2,173,024

8,321,670
271,867
191,759

14,651,402
124,707
81,50822,973,072
396,574
273,267

6,806,463
0029,779,536
396,574
273,267(Notes)1. Business classification is by aggregate sales classification.
2. Main products and goods in each business:(1) Machinery & Equipment Business: Various types of centrifuge and other machinery(2) Chemical Products Business: Synthetic resin, industrial materials and other chemical products(3) Of the assets in the current consolidated fiscal year, the amount of the total company assets included indeletion or total company items is 6,806,463 thousand yen. The main items are surplus funds applied(deposits) and long-term investment funds (investment securities) of the parent company.

26

Segment by Location
Year Ended October 31, 2010

(Thousands of yen)
Japan

Asia

Total

Deletion or

Consolidated

EntireCompany
I. Sales and Operating Income:Sales(1) Sales to Unaffiliated Customers

35,431,281

3,385,693

38,816,975

0

38,816,975

352,789

232,275

585,065(585,065)

035,784,071

3,617,969

39,402,040(585,065)

38,816,975

Operating Costs

33,707,673

3,521,023

37,228,696(584,746)

36,643,950

Operating Income

2,076,397

96,9462,173,343(319)

2,173,024

20,808,368

2,353,186

23,161,555

6,617,981

29,779,536(2) Internal Sales Among Segments
or Amount Transferred
Total

II. Assets(Notes)1. Main countries or regions included in the areas other than Japan:
Asia: China, Korea, and Indonesia (Total 3 countries)
2. Of the assets in the current consolidated fiscal year, the amount of the total company assets included in deletion or
total company items is 6,806,463 thousand yen. The main items are surplus funds applied (deposits) andlong-term investment funds (investment securities) of the parent company.
Overseas SalesYear Ended October 31, 2010

(Thousands of yen)Asia

I. Overseas Sales
II. Consolidated Sales

Other Regions

Total

8,171,648

691,9078,863,555

0038,816,975

21.1

1.8

22.8

III. Percentage of Overseas Sales for Consolidated Sales(Percent)(Notes)1. Areas including countries or regions are determined based on their degree of geographical proximity.
2. Main countries or regions included in the areas other than Japan:(1) Asia: China, Korea, Taiwan, and Indonesia(2) Other regions: America and Europe
3. Overseas net sales are sales of our company and subsidiaries made in countries and regions other than Japan.

27

(Segment Information)
1 Summary of Reporting Segments
TOMOE Engineering Co., Ltd. has established two operational headquarters. These operational headquarters aredeveloping their business activities by planning comprehensive domestic and overseas strategies for the respective
manufactured and commercial products they handle.
We therefore have assumed these two businesses, referred to as the “Machinery & Equipment Business” and the“Chemical Products Business”, as our company reporting segments. The Machinery & Equipment Business mainly
manufactures and sells centrifuge decanters, and the Chemical Products Business mainly manufactures, stocks
and sells chemical industry products.
The Company’s reporting segments are those units of the Company’s for which discrete financial information isavailable and for which the Board of Directors regularly conducts a review for the purpose of making decisions about
resources to be allocated to the segments and assess the segments' performance.
2 Method for calculating amounts of net sales, income or loss, assets, liabilities and other items for each reporting
segment
The accounting methods for reporting segments are identical to the accounting methods adopted for preparation of
the consolidated financial statements.

3 Information concerning the amount of net sales, income or loss, assets, liabilities and other items for each reporting
segment
Previous consolidated fiscal year (From November 1, 2009 to October 31, 2010)
The Company has omitted a description of this item because similar information has been disclosed as segment
information on the consolidated financial statements, based on the Company’s traditional accounting treatment forsegment information, for circumstances that comply with “Accounting Standard for Disclosures about Segments ofan Enterprise and Related Information” (Accounting Standards Board of Japan Statement No. 17 dated March 27,2009).
Year Ended October 31, 2011
Reporting segment
Machinery &Equipment
Business

Chemical
Products
Business

Total(Thousands of yen)Amount ofConsolidated
adjustment
financial
Note 1statements
Reported
amountNote 2

Sales
Sales to Unaffiliated Customers
Internal Sales Among
Segments or AmountTransferred
Total
Segment income
Segment assets
Other items

12,480,061

29,894,942

42,375,003

0

42,375,003

0
12,480,061
1,114,855
7,057,453

029,894,942
1,306,409
15,168,764

0
42,375,003
2,421,264
22,226,217

000
10,476,339

0
42,375,003
2,421,264
32,702,557

Depreciation & amortization
Increase in property, plant &equipment and intangible
assets269,309110,427

379,7360379,736

193,337

94,380287,717

2,513,938

2,801,656

28

(Notes)
1. For assets, the adjustment amount is mainly idle operating funds (cash on hand and in banks), long-term
investments (investment securities) and assets acquired in relation to a district redevelopment project.
2. The total amount for segment income agrees with the operating income reported on the Consolidated Statementof Income.
(Supplemental information)
Beginning from the current consolidated fiscal year, the Company has adopted the “Accounting Standard forDisclosures about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan
Statement No. 17, revision dated March 27, 2009 and the “Guidance on Accounting Standard for Disclosures about
Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan Guidance No. 20 dated
March 31, 2008).
(Related information)
Current consolidated fiscal year (From November 1, 2010 to October 31, 2011)
Regional Information

1. Net Sales(Thousands of yen)

Japan

Asia

OthersTotal

32,592,409

7,376,545

2,406,048

42,375,003

2. Property, Plant and Equipment
Japan4,969,342(Thousands of yen)
Asia

Total
299,689

5,269,032

29

(Per Share Information)
Year Ended October 31, 2010
Net asset per share:
Net income per share:30¥1,862.

¥135.77

Year Ended October 31, 2011
Net asset per share:¥2,113.56

Net income per share:¥292.17

Income per share for this fiscal year after adjustment of the

Income per share for this fiscal year after adjustment of theresidual securities is not presented as there are no residual

residual securities is not presented as there are no residual

securities.

securities.

(Note 1) Calculation basis for net asset per share are as follows:Year Ended October 31,

Year Ended October 31,

2010

2011

Total for net asset in consolidated balance sheet

18,852,575

21,329,827

18,583,476

21,090,599

269,098239,227

10,533,200

10,533,200

554,418554,501

9,978,782

9,978,699(thousands of yen)
Net asset for common stock (thousands of yen)
Breakdown of main difference (thousands of yen)
Quotient of minority shareholders
Number of outstanding common stock (share)
Number of treasury stock (share)
Number of common stock used for calculation of net assets
per share (share)(Note 2) Calculation basis for net income per share are as follows:Year EndedYear Ended

October 31, 2010

October 31, 2011

Net income for this fiscal year (thousands of yen)

1,354,856

2,915,454

Net income for common stock (thousands of yen)

1,354,856

2,915,454

Average number of common stock during the fiscal year

9,978,821

9,978,725(Significant subsequent events)
None.
.

30

5. Non-Consolidated Financial Statements(1) Balance Sheets(Thousands of yen)stAssetsnd

81 Period

82 Period(October 31, 2010)(October 31, 2011)

Current Assets
Cash and Deposits

4,767,726

5,977,638

Notes Receivable-Trade

3,476,336

3,012,122

Accounts Receivable-Trade

8,953,004

8,517,995

Merchandise and Finished Goods

2,138,637

2,455,679

Work in Process

1,303,267

898,642

Raw Materials and Supplies

348,167

573,146

Advance Payment

52,812

34,260Prepaid Expense

72,30780,838

Accrued Revenue

8,905

20,873

Short-Term Loans Receivable

54,81351,709Deferred Tax Assets

591,193592,910

8,750

27,969Allowance for Doubtful Accounts(28,793)(21,428)

Total Current Assets

21,747,128

22,222,359

2,081,553

1,872,337(1,158,021)(1,008,035)

923,531864,302

146,549

142,515(124,365)(121,969)

Structures, Net

22,183

20,546

Machinery and Equipment

2,369,370

2,245,184(1,947,782)(1,905,177)

421,587

340,006

39,43739,437(38,648)(39,042)788

394

Tools, Instrument and Equipment

860,362875,548

Accumulated Depreciation(797,918)(827,229)

62,44348,319Land

925,882

877,653

Lease Assets

73,97468,714

Accumulated Depreciation(37,376)(50,162)

Lease Assets, Net

36,59818,551OthersNoncurrent Assets
Property, Plant and Equipment
Buildings
Accumulated Depreciation
Buildings, Net
Structures
Accumulated Depreciation

Accumulated Depreciation
Machinery and Equipment, Net
VehiclesAccumulated Depreciation
Vehicles, Net

Tools, Instrument and Equipment, Net31

(Thousands of yen)stnd

81 Period

82 Period(October 31, 2010)(October 31, 2011)

Construction in Progress

02,543,938

2,393,015

4,713,712

Software

63,71753,925

Lease Asset

7,612

2,788

Telephone Rights

8,165

8,165

Total Intangible Assets

79,49564,880Investment Securities

645,862

614,346

Stocks of Affiliated Companies

483,765

483,765

Investments – Affiliated Companies

371,395

371,395

Employees

4,848

2,862

Claims in Bankruptcy

33,04632,023

Prepaid Pension Expense

521,499

520,777

Guarantee Deposits

394,830

347,100

Deferred Tax Assets

17,6750

Others76,51573,789Allowance for Doubtful Accounts(80,377)(78,405)

Total Investments and Other Assets

2,469,060

2,367,655

Total Noncurrent Assets

4,941,572

7,146,247

Total Assets

26,688,700

29,368,607

Total Property, Plant and Equipment
Intangible Assets

Investments and Other Assets

Long-Term Loans Receivable to32

(Thousands of yen)stLiabilities and Net Assets

81 Period

82nd Period(October 31, 2010)(October 31, 2011)

Liabilities
Current Liabilities
Notes Payable-Trade

1,133,947

719,619

Accounts Payable-Trade

4,630,191

4,768,583

Lease Obligations

23,236

14,257

Accounts Payable-Others

491,309

512,207

Income Taxes Payable

880,921491,053

Accrued Business Tax

8,748

8,471

Accrued Consumption Tax

5,792

29,002

1,025,034

990,165

Provision for Directors' Bonuses

84,62756,303

Allowance for Product Warranty

186,442

281,546

Accrued Expenses

15

15

Advances Received

379,427

395,109

Deposit Payable

81,936138,205

Guarantee Deposit

57,08280,565Derivatives Liabilities

145,378

09,134,091

8,485,106

Lease Obligations

22,254

7,992

Provision for Retirement Benefits

5,050

5,835

142,760

31,7600969,595

Total Noncurrent Liabilities

170,065

1,015,184

Total Liabilities

9,304,157

9,500,290

1,061,210

1,061,210

1,483,410

1,483,410

1,483,410

1,483,410

230,000

230,000

Provision for Dividend Reserve

250,000

250,000

Reserve for Deferred Gains on Fixed Assets

25,426

24,071

13,150,000

13,900,000

Provision for Bonuses

Total Current Liabilities
Noncurrent Liabilities

Provision for Directors' Retirement Benefits
Deferred Tax Liabilities

Net Assets
Shareholders’ Equity
Capital Stock
Capital Surplus
Capital Reserve
Total Capital Surplus
Retained Earnings
Legal Reserve of Retained Earnings
Other Retained Surplus

Other Reserve

33

(Thousands of yen)

Earned Surplus Carried Forward

81st Period

82nd Period(October 31, 2010)(October 31, 2011)

1,498,838

3,231,089

15,154,264

17,635,160(363,194)(363,319)

17,335,690

19,816,460

Securities

53,58551,626

Deferred Gains or Losses on Hedges(4,731)230

Total Valuation and Translation Adjustments

48,85351,856

Total Net Assets

17,384,543

19,868,317

Total Liabilities and Net Assets

26,688,700

29,368,607

Total Retained Earnings
Treasury Stock
Total Shareholders’ Equity
Valuation and Translation Adjustments
Valuation Difference on Available-for-Sale34

(2) Statements of Income(Thousands of yen)st

81 Period

82nd Period(October 31, 2010)(October 31, 2011)

Net Sales
Sales of Finished Goods

10,876,403

11,842,600

Merchandise Sale

25,116,175

27,979,757

35,992,578

39,822,357

Beginning Inventory

18,363

253,755

Cost of Manufacture

7,767,214

8,215,695

7,785,578

8,469,450

253,755

61,1937,531,822

8,408,257

Beginning Inventory

1,704,516

1,884,881

Purchase Amount

21,159,705

23,898,582

22,864,221

25,783,464

Ending Inventory

1,884,881

2,394,485

Cost of Sales

20,979,340

23,388,978

Total Cost of Sales

28,511,162

31,797,235

Gross Profit

7,481,415

8,025,121

5,667,795

5,859,011

1,813,620

2,166,109Interest income

3,655

3,780

Dividends Income

75,446

91,590Rent Income

69,76665,005

Foreign Exchange Gains

58,05200137,398

30,85427,812

237,775

325,586

1,475

1,172

75

71

Rental Cost

26,93723,898Commission Paid

10,0089,975

036,392

Loss on Valuation of Derivatives

93,4960

Others

14,11912,887

Total Non-Operating Expenses

146,113

84,398

Ordinary Income

1,905,282

2,407,298

Total Cost of Sales
Cost of Sales
Cost of Finished Goods Sold

Total
Ending Inventory
Cost of Sales
Cost of Merchandise Sold

Total

Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Gain on Valuation of Derivatives
OthersTotal Non-Operating Income
Non-Operating Expenses
Interest Expenses
Loss on Sales of Notes Payable

Foreign Exchange Loss35

(Thousands of yen)
81st Period

82nd Period(October 31, 2010)(October 31, 2011)

Extraordinary Income
Gain on Sales of Property, Plant and Equipment

010,410Gain on conversion of fixed asset rights

02,444,103

Gain on Sales of Investment Securities

159,344

14,190

Reversal of Allowance for Doubtful Accounts

13,617

17,185

172,962

2,485,889

Loss on Retirement of Noncurrent Assets

4,545

6,421

Loss on Sales of Investment Securities466

0

120,049

1,650

420

420

standard for asset retirement obligations

0

28,715

Total Extraordinary Losses

125,481

70,333

Income before Income Taxes and Minority Interests

1,952,762

4,822,853

Income Taxes-Current

1,035,404

1,005,906

Income Taxes-Deferred(259,910)

986,794

Total Income Taxes

775,493

1,992,700

Net Income

1,177,269

2,830,153

Total Extraordinary Income
Extraordinary Losses

Loss on Valuation of Investment Securities
Bad and Doubtful Debt
Loss on adjustment for changes of accounting

36

(3) Statements of Changes in Shareholders' Equity(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

Shareholders' Equity
Capital Stock
Surplus during Previous Fiscal Year

1,061,210

1,061,210

001,061,210

1,061,210

1,483,410

1,483,410

001,483,410

1,483,410

230,000

230,00000

230,000

230,000

250,000

250,00000

250,000

250,000

26,72025,426(1,293)(1,355)

Total Amount Changed(1,293)(1,355)

Surplus during This Fiscal Year

25,426

24,071

12,400,000

13,150,000

Accumulation of Other Reserve

750,000

750,000

Total Amount Changed

750,000

750,000

Surplus during This Fiscal Year

13,150,000

13,900,000

1,369,642

1,498,838

Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Capital Surplus
Capital Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Retained Earnings
Earned Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Other Retained Earnings
Reserve for dividend allowance
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total Amount Changed
Surplus during This Fiscal Year
Reserve for Deferred Gains on Fixed Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Reversal of Reserve for Deferred Gains
on Fixed Assets

Other Reserve
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Earned Surplus Carried Forward
Surplus during Previous Fiscal Year
Changes during This Fiscal Year37

(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

Reversal of Reserve for Deferred
Gains on Fixed Assets

1,293

1,355

Accumulation of Other Reserve(750,000)(750,000)

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,177,269

2,830,153

Total Amount Changed

129,195

1,732,251

Surplus during This Fiscal Year

1,498,838

3,231,089

14,276,362

15,154,264

0

0

0

0

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,177,269

2,830,153

877,9012,480,896

15,154,264

17,635,160(363,045)(363,194)

Issued Shares Reacquired

(148)

(125)

Total Amount Changed

(148)

(125)

(363,194)(363,319)

16,457,936

17,335,690

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,177,269

2,830,153

(148)

(125)

Total Amount Changed

877,753

2,480,770

Surplus during This Fiscal Year

17,335,690

19,816,460

77,74953,585(24,164)(1,958)(24,164)(1,958)53,58551,626(712)(4,731)

Total Retained Earnings
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Reversal of Reserve for Deferred
Gains on Fixed Asset
Accumulation of Other Reserve

Total Amount Changed
Surplus during This Fiscal Year
Treasury Stock
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Surplus during This Fiscal Year
Total Shareholders’ Equity
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired

Valuation and Translation Adjustments
Valuation Difference on Available-for-sale
Securities
Surplus During Previous Fiscal Year
Changes During This Fiscal Year
Total (Net) Amount Changed(Except Shareholders' Equity)
Changes during This Fiscal Year
Surplus during This Fiscal Year
Deferred Gains or Losses on Hedges
Surplus during Previous Fiscal Year
Changes during This Fiscal Year38

(Thousands of yen)
Year Ended October 31, 2010

Year Ended October 31, 2011

Total (Net) Amount Changed(Except Shareholders' Equity)(4,019)4,962

Changes during This Fiscal Year

(4,019)4,962(4,731)

230

77,03748,853(Except Shareholders' Equity)(28,184)

3,003

Changes during This Fiscal Year

(28,184)

3,003

48,85351,856

16,534,974

17,384,543

Cash Dividend Paid

(299,367)(349,257)

Net Income

1,177,269

2,830,153

(148)

(125)

(Except Shareholders' Equity)(28,184)

3,003

Total Amount Changed

849,568

2,483,773

Surplus during This Fiscal Year

17,384,543

19,868,317

Surplus during This Fiscal Year
Total Valuation and Translation Adjustments
Surplus during Previous Fiscal Year
Changes during This Fiscal Year
Total (Net) Amount Changed

Surplus during This Fiscal Year
Total Net Assets
Surplus during Previous Fiscal Year
Changes during This Fiscal Year

Issued Shares Reacquired
Total (Net) Amount Changed39

(4) Notes for Premise of Going Concern
None.

(5) Notes for Non-Consolidated Financial Statements(Per Share Information)
81st Period

82nd Period

Year Ended October 31, 2010

Year Ended October 31, 201115

Net asset per share:¥1,742.

Net asset per share:¥1,991.07

Net income per share:¥117.98

Net income per share:¥283.62

Income per share for this fiscal year after adjustment of the

Income per share for this fiscal year after adjustment of theresidual securities is not presented as there are no residual

residual securities is not presented as there are no residual

securities.

securities.

(Note) Calculation basis
1. Net assets per share
81st Period

82nd Period(Year Ended(Year Ended

October 31, 2010)

October 31, 2011)

Total for net assets in balance sheets (Thousands of yen)

17,384,543

19,868,317

Net assets for common stock (Thousands of yen)

17,384,543

19,868,317

Number of outstanding common stock (Share)

10,533,200

10,533,200

Number of treasury common stock (Share)

554,418554,501

9,978,782

9,978,699

Number of common stock as of the end of the current consolidated
fiscal year used for calculation of net assets per share (Shares)
2. Net income per share
81st Period

82nd Period(Year Ended October 31, 2010)(Year Ended October 31, 2011)

Net income for this fiscal year

1,177,269

2,830,153

1,177,269

2,830,153

9,978,821

9,978,725(Thousands of yen)
Net income for common stock(Thousands of yen)
Average number of common stock during
the fiscal year (Shares)406. Other Notes(1) Appointment of Officers
1) Representative Director: No change2) Other Directors:
1. Candidate for newly appointed Corporate Auditor
AuditorToshiharu Murase(Currently Vice President and Director, Mizuho Factors, Ltd.)

2. Retiring Auditor
AuditorNobushiro Yoshida

Note: Mr. Toshiharu Murase, a candidate for Corporate Auditor qualifies as an outside auditor.

41