7th Fiscal
Year

From April 1,2012
to March 31, 2013（）

Consolidated Financial Statements
Semi-Annual（toFrom April 1,2012
September 30, 2012

Consolidated Subsidiaries:
Covalent Materials Tokuyama Corporation
Covalent Materials Nagasaki Corporation
Tokai Ceramics Co., Ltd.
Covalent Sales Corporation
Covalent Materials USA Inc.
Covalent Machinery Corporation
Denko Co., Ltd.

）Consolidated Balance Sheet(as of September 30, 2012)(Thousands of Yen)
AssetsLiabilities

Current Assets
Cash and deposits
Trade receivables (notes and accounts)
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts

48,286,750
28,801,775
6,312,415
7,942,166
3,413,685
1,818,106△ 1,398

Noncurrent Assets
Property, plant and equipment
Buildings
Machinery
Equipment
Land
Lease assets
OtherIntangible assets
Goodwill
Other
Investments and other assets
Investments in securities
Deferred tax assets
OtherAllowance for doubtful accounts

41,444,635
29,553,682
12,074,553
6,257,866
184,012
9,311,047
823,728
902,474
10,767,563
10,540,753
226,810
1,123,389
142,519331,006
751,809△ 101,946

Current Liabilities
Trade payables (notes and accounts)
Short term borrowings
Current portion of bonds
Other72,550,739
3,496,927
7,746,000
53,300,000
8,007,812

Noncurrent Liabilities
Accrued retirement benefit costs
Asset retirement obligations
Deferred tax liabilities
Other

7,308,101
2,687,447
240,020
2,683,947
1,696,686

Total Liabilities

79,858,841
Net Assets

Shareholders Equity
Paid in capital
Capital surplus
Retained earnings
Accumulated other comprehensive income
Valuation difference on securities
Foreign currency translation adjustment
Minority Interest

Total Assets

89,731,386

9,402,064
34,941,193
40,269,524△ 65,808,653△ 342,314△ 985△ 341,329812,793

Net Assets

9,872,544

Total liabilities and net assets

89,731,386※ An audit report has not yet been received for the financials noted above

Consolidated Income Statement(from April 1,2012 to September 30, 2012)(Thousands of Yen)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Amortization of negative goodwill
Other
Non-operating loss
Interest expense
OtherRecurring loss
Extraordinary gains
Extraordinary lossLoss before income taxes and minority interests
Income taxes
Adjustment to income taxes
Profit before minority interests
Minority interests in loss of consolidated subsidiaries
Net profit※ An audit report has not yet been received for the financials noted above

16,484,071
12,105,450
4,378,620
3,684,369
694,251
61,79851,638313,755
829,388463,422427,193

1,292,811
171,367

81,117
1,705,016
1,795,265
52,701△ 3,299,491△ 3,246,789
1,451,524
19,665
1,471,189

Consolidated Cash Flow Statement(from April 1,2012 to September 30, 2012)

CategoryⅠ

Cash flow from operating activities
Loss before income taxes
Depreciation
Amortization of goodwill
Interest expense
Change in trade receivables
Change in inventories
Change in trade payables
OtherSubtotal
Interest and dividend income received
Interest payments
Extraordinary severance payments
Income taxes
Cash flow from operating activitiesⅡ△ 1,795,265
1,650,959
364,177
829,388△ 606,563
676,318
36,5043,980,355
5,311,875
61,798△ 826,590△ 943,666△ 102,819
3,324,597

Cash flow from investing activities
Purchase of property, plant and equipment
Other
Cash flow from investing activities

Ⅲ(Thousands of Yen)
Amount△ 911,508△ 70,738△ 982,247

Cash flow from financing activities
Decrease in long-term borrowings
Repayment of lease obligations
Other
Cash flow from financing activities△ 330,000△ 71,983△ 49,920△ 451,903

ⅣⅤ

Difference in cash and deposits from currency conversion
Change in cash and deposits△ 23,816
1,866,630

ⅥⅦ

Cash and deposits at beginning of period
Cash and deposits at end of period

17,682,592
19,549,222※

Difference in cash and deposits from balance sheet
Cash and deposits at end of period (balance sheet)
Time deposits with terms extending over 3 months
Cash and deposits at end of period (cash flow statement)

28,801,775
9,252,552
19,549,222※ An audit report has not yet been received for the financials noted above