##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 Commission file number 001-08346
 TDK KABUSHIKI KAISHA
 
  TDK CORPORATION
 
   
   
  
 
   Title of each class
    
    Name of each exchange on which registeredAmerican Depositary Shares
    
    New York Stock ExchangeCommon Stock
    
    New York Stock Exchange
         þ o
  o þ
  þ o
  þ o o
  þ o o
  o o
  o þ




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##### 



TABLE OF CONTENTS
  
 PAGEExplanatory Note
    
    
    1Forward-Looking Statements
    
    
    1PART IItem 1. Identity of Directors, Senior Management and Advisors
    
    
    2Item 2. Offer Statistics and Expected Timetable
    
    
    2Item 3. Key Information
    
    
    3Item 4. Information on the Company
    
    
    10Item 4A. Unresolved Staff Comments
    
    
    17Item 5. Operating and Financial Review and Prospects
    
    
    18Item 6. Directors, Senior Management and Employees
    
    
    52Item 7. Major Shareholders and Related Party Transactions
    
    
    72Item 8. Financial Information
    
    
    73Item 9. The Offer and Listing
    
    
    74Item 10. Additional Information
    
    
    76Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    95Item 12. Description of Securities Other than Equity Securities
    
    
    96PART IIItem 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    97Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    97Item 15. Controls and Procedures
    
    
    97Item 15T. Controls and Procedures
    
    
    98Item 16A. Audit Committee Financial Expert
    
    
    98Item 16B. Code of Ethics
    
    
    99Item 16C. Principal Accountant Fees and Services
    
    
    99Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    101Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    102PART IIIItem 17. Financial Statements
    
    
    103Item 18. Financial Statements
    
    
    157Item 19. Exhibits
    
    
    157SIGNATURESEX-1.1 ARTICLES OF INCORPORATION (English translation)EX-1.2 REGULATIONS OF THE BOARD OF DIRECTORS (English translation)EX-1.3 REGULATIONS OF THE BOARD OF COMPANY AUDITORS (English translation)EX-2.1 SHARE HANDLING REGULATIONS (English translation)EX-8.1 LIST OF SIGNIFICANT SUBSIDIARIESEX-11.1 TDK CODE OF ETHICS (English translation)EX-12.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF CEO OF THE COMPANYEX-12.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 OF CFO OF THE COMPANYEX-13.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 OF CEO OF THE COMPANYEX-13.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 OF CFO OF THE COMPANY
  i




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Explanatory Note
   
 Forward-Looking Statements
   - 1 -




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PART I
 
 Item 1.
    
    Identity of Directors, Senior Management and Advisers
 Not applicable.
 
 Item 2.
    
    Offer Statistics and Expected Timetable
 Not applicable.
 - 2 -




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Item 3.
    
    Key Information
 A.
    
    Selected financial data
   Income Statement Data
 Thousands ofU.S. dollars,except perMillions of yen, except per share amounts
    
    shareFor the year ended March 31
    

amounts (1)2008
    
    2007
    
    2006
    
    2005
    
    2004
    
    2008Net sales
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    ¥
    657,853
    
    
    ¥
    655,792
    
    
    $
    8,662,850Cost of sales
    
    
    635,529
    
    
    
    622,819
    
    
    
    585,780
    
    
    
    484,323
    
    
    
    476,407
    
    
    
    6,355,290Gross profit
    
    
    230,756
    
    
    
    239,206
    
    
    
    209,400
    
    
    
    173,530
    
    
    
    179,385
    
    
    
    2,307,560Selling, general and
administrative expenses
    
    
    158,921
    
    
    
    159,106
    
    
    
    142,052
    
    
    
    119,886
    
    
    
    122,875
    
    
    
    1,589,210Transfer to the government of
the substitutional portion of
Employees Pension Fund:Subsidy from the government
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,533
    )
    
    
    
    
    
    
    Loss on settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,347
    
    
    
    
    
    
    
    Gain on sale of business to Imation
Corp.
    
    
    (15,340
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153,400
    )Restructuring cost
    
    
    
    
    
    
    510
    
    
    
    6,825
    
    
    
    
    
    
    
    
    
    
    
    Operating income
    
    
    87,175
    
    
    
    79,590
    
    
    
    60,523
    
    
    
    59,830
    
    
    
    56,510
    
    
    
    871,750Income from continuing
operations before income
taxes
    
    
    91,505
    
    
    
    88,665
    
    
    
    66,103
    
    
    
    60,728
    
    
    
    55,847
    
    
    
    915,050Income from continuing
operations
    
    
    71,461
    
    
    
    70,125
    
    
    
    44,411
    
    
    
    36,965
    
    
    
    43,355
    
    
    
    714,610Loss from discontinued
operations
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    3,665
    
    
    
    1,254
    
    
    
    Net income
    
    
    71,461
    
    
    
    70,125
    
    
    
    44,101
    
    
    
    33,300
    
    
    
    42,101
    
    
    
    714,610Per Common Share:Income from continuing
operations per share:Basic
    
    ¥
    551.72
    
    
    ¥
    529.88
    
    
    ¥
    335.84
    
    
    ¥
    279.41
    
    
    ¥
    327.27
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    335.54
    
    
    
    279.25
    
    
    
    327.15
    
    
    
    5.51Loss from discontinued
operations per share:Basic
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    (2.34
    )
    
    ¥
    (27.70
    )
    
    ¥
    (9.47
    )
    
    $
    Diluted
    
    
    
    
    
    
    
    
    
    
    (2.34
    )
    
    
    (27.69
    )
    
    
    (9.46
    )
    
    
    
 - 3 -




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Thousands ofU.S. dollars,except perMillions of yen, except per share amounts
    
    shareFor the year ended March 31
    

amounts(1)2008
    
    2007
    
    2006
    
    2005
    
    2004
    
    2008Net income per share:Basic
    
    ¥
    551.72
    
    
    ¥
    529.88
    
    
    ¥
    333.50
    
    
    ¥
    251.71
    
    
    ¥
    317.80
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    333.20
    
    
    
    251.56
    
    
    
    317.69
    
    
    
    5.51Cash dividends
    
    ¥
    120.00
    
    
    ¥
    100.00
    
    
    ¥
    80.00
    
    
    ¥
    60.00
    
    
    ¥
    50.00U.S. Dollar equivalents (1)
    
    $
    1.20
    
    
    $
    0.85
    
    
    $
    0.68
    
    
    $
    0.56
    
    
    $
    0.47
 Balance Sheet Data
 Millions of yen, except per share amounts
    
    Thousands ofand exchange rate for yen
    
U.S.
dollars(2)2008
    
    2007
    
    2006
    
    2005
    
    2004
    
    2008Net working capital (3)
    
    ¥
    300,859
    
    
    ¥
    449,830
    
    
    ¥
    397,131
    
    
    ¥
    379,746
    
    
    ¥
    360,555
    
    
    $
    3,008,590Total assets
    
    
    935,533
    
    
    
    989,304
    
    
    
    923,503
    
    
    
    808,001
    
    
    
    770,319
    
    
    
    9,355,330Short-term indebtedness
    
    
    9,192
    
    
    
    3,527
    
    
    
    6,427
    
    
    
    103
    
    
    
    416
    
    
    
    91,920Long-term indebtedness
    
    
    152
    
    
    
    532
    
    
    
    405
    
    
    
    81
    
    
    
    27
    
    
    
    1,520Retirement and
severance benefits
    
    
    33,990
    
    
    
    32,290
    
    
    
    26,790
    
    
    
    28,839
    
    
    
    73,521
    
    
    
    339,900Capital Stock
    
    
    32,641
    
    
    
    32,641
    
    
    
    32,641
    
    
    
    32,641
    
    
    
    32,641
    
    
    
    326,410Stockholders equity
    
    
    716,577
    
    
    
    762,712
    
    
    
    702,419
    
    
    
    639,067
    
    
    
    576,219
    
    
    
    7,165,770Number of shares
outstanding (in
thousands)
    
    
    128,956
    
    
    
    132,434
    
    
    
    132,267
    
    
    
    132,245
    
    
    
    132,409
 Exchange Rate Information
 Yen exchange rates per U.S. dollar (4)
    
    Average
    
    
    Term end
    
    
    High
    
    
    LowYear ended March 31:2004
    
    
    112.75
    
    
    
    104.18
    
    
    
    120.55
    
    
    
    104.182005
    
    
    107.28
    
    
    
    107.22
    
    
    
    114.30
    
    
    
    102.262006
    
    
    113.67
    
    
    
    117.48
    
    
    
    120.93
    
    
    
    104.642007
    
    
    116.55
    
    
    
    117.56
    
    
    
    121.81
    
    
    
    110.072008
    
    
    113.61
    
    
    
    99.85
    
    
    
    124.09
    
    
    
    96.882009 (through June 30, 2008)
    
    
    105.39
    
    
    
    106.17
    
    
    
    108.29
    
    
    
    100.87Month of 2008:January 2008
    
    
    
    
    
    
    
    
    
    
    109.70
    
    
    
    105.42February 2008
    
    
    
    
    
    
    
    
    
    
    108.15
    
    
    
    104.19March 2008
    
    
    
    
    
    
    
    
    
    
    103.99
    
    
    
    96.88April 2008
    
    
    
    
    
    
    
    
    
    
    104.56
    
    
    
    100.87May 2008
    
    
    
    
    
    
    
    
    
    
    105.52
    
    
    
    103.01June 2008
    
    
    
    
    
    
    
    
    
    
    108.29
    
    
    
    104.41
 
 Notes:(1)
    
    Translated based on the rates specified in Note (4) below on the respective
dates of semi-annual payments for each year.(2)
    
    Translated, except for cash dividend amounts, for convenience of the reader
into U.S. dollars at the rate of ¥100 = $1, the approximate rate on the
Tokyo Foreign Exchange Market on March 31, 2008. - 4 -




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(3)
    
    Net working capital is defined as current assets less current liabilities.(4)
    
    Based on the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the Federal Reserve
Bank of New York. The average rates are computed based on the exchange
rates on the last day of each month during the year. B.
    
    Capitalization and indebtedness
  C.
    
    Reasons for the offer and use of proceeds
  D.
    
    Risk factors
 Our business is exposed to fluctuations in economic conditions that may adversely affect our
business results and financial condition.
  Fluctuations in currency exchange rates could adversely affect our business results and
financial condition.
  We are susceptible to risks involved with selling our products in markets outside of
Japan.
  - 5 -




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A slow-down of the Chinese economy, adverse changes in political and economic policies of the
Chinese government, or other factors in China may reduce our growth and profitability.
   We may not be able to compete effectively with respect to prices, which would have a material
adverse effect on our profitability.
   Rapid changes in technology could adversely affect our business and hurt our competitive
position.
  Claims of product liability and other issues associated with the quality of our products
could adversely affect our business results and brand name.
   - 6 -




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Our proprietary technology is difficult to protect and unauthorized use of our proprietary
technology by third parties may reduce the value of our products and brand and impair our ability
to compete effectively.
   Our business may suffer if we are sued for infringing upon the intellectual property rights
of third parties.
   Our success depends on attracting and retaining highly-skilled employees, and we would suffer
material adverse effects if we are unable to do so.
   We are dependent on certain raw materials and other products, and our business will suffer if
we are unable to procure such materials.
   - 7 -




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Increased government regulation of our industry or changes in those regulations, whether in
Japan or overseas, may limit our ability to compete effectively.
    Fluctuations in interest rates may have an adverse effect on our profitability.
  We are developing business to business transactions on a global scale, whereby we supply electronic components to a variety of customers, and are thus susceptible to adverse changes with respect to the business of such customers.
     Our operations depend on facilities throughout the world and are subject to forces of nature
that could disrupt our ability to serve our customers.
  - 8 -




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If we are unable to comply with the various environmental laws and regulations to which we
are subject, we may have to withdraw from certain business activities, which would have an
adverse effect on our brand and business operations.
   Mergers and acquisitions may have an adverse effect on our profitability.
  Japans Unit Share System could affect access to Japanese markets by holders of American
Depositary Shares (ADSs), which could adversely affect the price of our shares.
  Holders of American Depositary Shares have limited rights, which could adversely affect the
price of our shares.
   - 9 -




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Item 4.
    
    Information on the Company
 A.
    
    History and development of the Company
 History
      - 10 -




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B.
    
    Business overview
 Sales by product category
   Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (millions of(%)
    
    
    U.S. dollars)Electronic Materials and Components:Electronic materials
    
    ¥
    200,101
    
    
    ¥
    199,243
    
    
    ¥
    180,766
    
    
    $
    2,001.0(23.1
    )
    
    
    (23.1
    )
    
    
    (22.7
    )Electronic devices
    
    
    209,089
    
    
    
    198,199
    
    
    
    154,680
    
    
    
    2,090.9(24.1
    )
    
    
    (23.0
    )
    
    
    (19.5
    )Recording devices
    
    
    334,734
    
    
    
    304,822
    
    
    
    315,928
    
    
    
    3,347.4(38.6
    )
    
    
    (35.4
    )
    
    
    (39.7
    )Other electronic components
    
    
    74,191
    
    
    
    56,557
    
    
    
    36,376
    
    
    
    741.9(8.6
    )
    
    
    (6.5
    )
    
    
    (4.6
    )Sub total
    
    
    818,115
    
    
    
    758,821
    
    
    
    687,750(94.4
    )
    
    
    (88.0
    )
    
    
    (86.5
    )
    
    
    8,181.2Recording Media:
    
    
    48,170
    
    
    
    103,204
    
    
    
    107,430
    
    
    
    481.7(5.6
    )
    
    
    (12.0
    )
    
    
    (13.5
    )Total
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    $
    8,662.9(100.0
    )
    
    
    (100.0
    )
    
    
    (100.0
    )
 
 Note:The business segment information, in addition to being an Item 4 requirement,
is required by the Japanese Securities Exchange Law. Segment information has not been derived from the audited consolidated financial statements in Item 17. Electronic Materials and Components segment.
 (i) Electronic materials.
   - 11 -




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(ii) Electronic devices.
    (iii) Recording devices.
   (iv) Other electronic components.
  Recording Media.
    
 *Linear Tape-Open, LTO, the LTO logo, Ultrium and the Ultrium logo are trademarks of HP, IBM
and Quantum in the U.S. and other countries. - 12 -




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Marketing channels in Japan
  Operations outside Japan
  
    
    35 manufacturing various product lines and distributing their products in their
country of operation and other countries;
    
    16 sales subsidiaries which exclusively handle products manufactured by TDK;
    
    1 holding company for the administration of TDKs U.S. operations;
    
    1 holding company for the administration of TDKs European operations;
    
    1 company for research and development in Ireland;
    
    2 companies for research and development in the U.S.;
    
    1 company for engineering service for magnetic heads in Singapore;
    
    1 local management company for the administration of TDKs Chinese operations;
    
    1 company for engineering service for magnetic heads in China;
    
    1 company for engineering service for magnetic heads in South Korea;
    
    1 holding company for the administration of Lambdas U.S. operations;
    
    1 company for administration in Canada;
    
    1 holding company for the administration of Lambdas European operations;
    
    1 company for research and development in Taiwan;
    
    1 holding company for the administration of Magnecomps U.S. operations;
    
    1 holding company for the administration of Magnecomps Asian operations;
    
    1 company for property investment in Thailand;
    
    3 dormant companies; and
    
    3 companies in the course of liquidation.
  China(including
Hong Kong)
    
    HDD heads, inductors, ferrite cores, capacitors, transformer, power supplies, and ferrite magnetsUnited States
    
    HDD heads, capacitors, ferrite magnets, and power suppliesTaiwan
    
    Capacitors, ferrite cores, and power suppliesPhilippines
    
    HDD headsThailand
    
    Audiotapes, rare-earth metal magnets, power supplies, and suspension assemblies for HDD headsMalaysia
    
    Power supplies, Capacitors and high-frequency componentsSouth Korea
    
    Capacitors and inductorsHungary
    
    Capacitors and ferrite cores
   - 13 -




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Years ended March 312008
    
    
    2007
    
    
    2006
        
    2008(millions of(millions of yen) (%)
    
    
    
    
    
    
    
    
    
    
    U.S. dollars)Japan
    
    ¥
    172,292
    
    
    
    (19.9
    )
    
    ¥
    187,056
    
    
    
    (21.7
    )
    
    ¥
    168,554
    
    
    
    (21.2
    )
    
    $
    1,722.9North America
    
    
    63,126
    
    
    
    (7.3
    )
    
    
    75,862
    
    
    
    (8.8
    )
    
    
    65,931
    
    
    
    (8.3
    )
    
    
    631.3Europe
    
    
    52,801
    
    
    
    (6.1
    )
    
    
    82,721
    
    
    
    (9.6
    )
    
    
    74,846
    
    
    
    (9.4
    )
    
    
    528.0Asia and others
    
    
    578,066
    
    
    
    (66.7
    )
    
    
    516,386
    
    
    
    (59.9
    )
    
    
    485,849
    
    
    
    (61.1
    )
    
    
    5,780.7Total
    
    ¥
    866,285
    
    
    
    (100.0
    )
    
    ¥
    862,025
    
    
    
    (100.0
    )
    
    ¥
    795,180
    
    
    
    (100.0
    )
    
    $
    8,662.9
 
 Note:Net sales in each geographic area are based on the location of TDK entities
where the external sales are generated. Patents and Licenses
  Competition
   - 14 -




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Raw Materials and Sources of Supply
   C.
    
    Organizational structure
  - 15 -




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D.
    
    Property, plants and equipment
   Number of
    
    Floor spaceprincipal
    
    (thousands ofLocation
    
    factories
    
    square feet)

    
    Principal products manufacturedJapanAkita
    
    16
    
    
    2,047
    
    
    Capacitors, ferrite cores, inductors and high-frequency componentsNagano
    
    4
    
    
    1,150
    
    
    HDD heads and optical disksChiba
    
    1
    
    
    724
    
    
    Rare-earth metal magnets, ferrite cores and power suppliesYamanashi
    
    3
    
    
    603
    
    
    HDD heads and data storage tapesOita
    
    1
    
    
    470
    
    
    VideotapesShizuoka
    
    2
    
    
    465
    
    
    Ferrite magnetsYamagata
    
    3
    
    
    345
    
    
    InductorsIwate
    
    1
    
    
    298
    
    
    CapacitorsIbaraki
    
    3
    
    
    209
    
    
    Display and power suppliesNiigata
    
    1
    
    
    54
    
    
    Power suppliesKanagawa
    
    1
    
    
    25
    
    
    Ferrite magnetsOverseasChina
    
    7
    
    
    4,684
    
    
    HDD heads, inductors, ferrite cores, capacitors, transformer, power supplies and ferrite magnetsUnited
States of America
    
    7
    
    
    746
    
    
    HDD heads, capacitors, ferrite magnets and power suppliesThailand
    
    3
    
    
    626
    
    
    Audiotapes, rare-earth metal magnets, power supplies and suspension assemblies for HDD headsPhilippines
    
    1
    
    
    441
    
    
    HDD headsTaiwan
    
    1
    
    
    380
    
    
    Capacitors, ferrite cores and power suppliesMalaysia
    
    2
    
    
    364
    
    
    Power supplies, Capacitors and high-frequency componentsChina (Hong Kong)
    
    3
    
    
    271
    
    
    Ferrite coresSouth Korea
    
    1
    
    
    164
    
    
    Capacitors and inductorsHungary
    
    1
    
    
    160
    
    
    Capacitors and ferrite coresUnited Kingdom
    
    1
    
    
    42
    
    
    Power suppliesIsrael
    
    1
    
    
    28
    
    
    Power suppliesTotal
    
    64
    
    
    14,296
 - 16 -




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Item 4A.
    
    Unresolved Staff Comments
  - 17 -




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Item 5.
    
    Operating and Financial Review and Prospects
 Overview
          -18-




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- 19 -




---



##### Table of Contents



A.
    
    Operating Results
 Results of Operations
 Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (thousands(%)
    
    
    of dollars)Net sales
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    $
    8,662,850(100.0
    )
    
    
    (100.0
    )
    
    
    (100.0
    )Cost of sales
    
    
    635,529
    
    
    
    622,819
    
    
    
    585,780
    
    
    
    6,355,290(73.4
    )
    
    
    (72.3
    )
    
    
    (73.7
    )Gross profit
    
    
    230,756
    
    
    
    239,206
    
    
    
    209,400
    
    
    
    2,307,560(26.6
    )
    
    
    (27.7
    )
    
    
    (26.3
    )Selling, general and administrative expenses
    
    
    158,921
    
    
    
    159,106
    
    
    
    142,052
    
    
    
    1,589,210(18.3
    )
    
    
    (18.4
    )
    
    
    (17.9
    )Gain on sale of business to Imation Corp.
    
    
    (15,340
    )
    
    
    
    
    
    
    
    
    
    
    (153,400
    )(-1.8
    )
    
    
    
    
    
    
    Restructuring cost
    
    
    
    
    
    
    510
    
    
    
    6,825
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.8
    )Operating income
    
    
    87,175
    
    
    
    79,590
    
    
    
    60,523
    
    
    
    871,750(10.1
    )
    
    
    (9.2
    )
    
    
    (7.6
    )Other income (other deductions)
    
    
    4,330
    
    
    
    9,075
    
    
    
    5,580
    
    
    
    43,300(0.5
    )
    
    
    (1.1
    )
    
    
    (0.7
    )Income taxes and minority interests, net of tax
    
    
    20,044
    
    
    
    18,540
    
    
    
    21,692
    
    
    
    200,440(2.4
    )
    
    
    (2.2
    )
    
    
    (2.7
    )Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Net income
    
    ¥
    71,461
    
    
    ¥
    70,125
    
    
    ¥
    44,101
    
    
    $
    714,610(8.2
    )
    
    
    (8.1
    )
    
    
    (5.5
    )
 Sales by Region
 Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (thousands(%)
    
    
    of dollars)Japan
    
    ¥
    152,113
    
    
    ¥
    171,352
    
    
    ¥
    173,658
    
    
    $
    1,521,130(17.6
    )
    
    
    (19.9
    )
    
    
    (21.8
    )North and South America
    
    
    96,287
    
    
    
    103,124
    
    
    
    90,192
    
    
    
    962,870(11.1
    )
    
    
    (11.9
    )
    
    
    (11.4
    )Europe
    
    
    59,128
    
    
    
    83,545
    
    
    
    75,895
    
    
    
    591,280(6.8
    )
    
    
    (9.7
    )
    
    
    (9.5
    )Asia (excluding Japan) and Oceania
    
    
    553,911
    
    
    
    499,505
    
    
    
    451,710
    
    
    
    5,539,110(63.9
    )
    
    
    (58.0
    )
    
    
    (56.8
    )Middle East and Africa
    
    
    4,846
    
    
    
    4,499
    
    
    
    3,725
    
    
    
    48,460(0.6
    )
    
    
    (0.5
    )
    
    
    (0.5
    )Net sales
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    $
    8,662,850(100.0
    )
    
    
    (100.0
    )
    
    
    (100.0
    )
  - 20 -




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##### Table of Contents



Segment Information
  Industry Segment Information
 Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (thousandsof dollars)ELECTRONIC MATERIALS AND COMPONENTSNet salesExternal sales
    
    ¥
    818,115
    
    
    ¥
    758,821
    
    
    ¥
    687,750
    
    
    $
    8,181,150Intersegment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenue
    
    
    818,115
    
    
    
    758,821
    
    
    
    687,750
    
    
    
    8,181,150(100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)Operating expenses
    
    
    742,143
    
    
    
    677,046
    
    
    
    613,417
    
    
    
    7,421,430(90.7
    %)
    
    
    (89.2
    %)
    
    
    (89.2
    %)
    
    
    (90.7
    %)Operating income
    
    ¥
    75,972
    
    
    ¥
    81,775
    
    
    ¥
    74,333
    
    
    $
    759,720(9.3
    %)
    
    
    (10.8
    %)
    
    
    (10.8
    %)
    
    
    (9.3
    %)Identifiable assets
    
    
    790,005
    
    
    
    735,204
    
    
    
    672,596
    
    
    
    7,900,050Depreciation and amortization
    
    
    68,910
    
    
    
    62,605
    
    
    
    53,599
    
    
    
    689,100Capital expenditures
    
    
    81,957
    
    
    
    68,394
    
    
    
    71,070
    
    
    
    819,570RECORDING MEDIANet salesExternal sales
    
    ¥
    48,170
    
    
    ¥
    103,204
    
    
    ¥
    107,430
    
    
    $
    481,700Intersegment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenue
    
    
    48,170
    
    
    
    103,204
    
    
    
    107,430
    
    
    
    481,700(100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)Operating expenses
    
    
    36,967
    
    
    
    105,389
    
    
    
    121,240
    
    
    
    369,670(76.7
    %)
    
    
    (102.1
    %)
    
    
    (112.9
    %)
    
    
    (76.7
    %)Operating income (loss)
    
    ¥
    11,203
    
    
    ¥
    (2,185
    )
    
    ¥
    (13,810
    )
    
    $
    112,030(23.3
    %)
    
    
    (-2.1
    %)
    
    
    (-12.9
    %)
    
    
    (23.3
    %)Identifiable assets
    
    
    65,264
    
    
    
    75,442
    
    
    
    79,109
    
    
    
    652,640Depreciation and amortization
    
    
    2,387
    
    
    
    2,732
    
    
    
    4,941
    
    
    
    23,870Capital expenditures
    
    
    2,355
    
    
    
    2,046
    
    
    
    2,841
    
    
    
    23,550ELIMINATIONS AND CORPORATECorporate assets
    
    ¥
    80,264
    
    
    ¥
    178,658
    
    
    ¥
    171,798
    
    
    $
    802,640TOTALNet salesExternal sales
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    $
    8,662,850Intersegment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenue
    
    
    866,285
    
    
    
    862,025
    
    
    
    795,180
    
    
    
    8,662,850(100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)
    
    
    (100.0
    %)Operating expenses
    
    
    779,110
    
    
    
    782,435
    
    
    
    734,657
    
    
    
    7,791,100(89.9
    %)
    
    
    (90.8
    %)
    
    
    (92.4
    %)
    
    
    (89.9
    %)Operating income
    
    ¥
    87,175
    
    
    ¥
    79,590
    
    
    ¥
    60,523
    
    
    $
    871,750(10.1
    %)
    
    
    (9.2
    %)
    
    
    (7.6
    %)
    
    
    (10.1
    %)Identifiable and corporate assets
    
    
    935,533
    
    
    
    989,304
    
    
    
    923,503
    
    
    
    9,355,330Depreciation and amortization
    
    
    71,297
    
    
    
    65,337
    
    
    
    58,540
    
    
    
    712,970Capital expenditures
    
    
    84,312
    
    
    
    70,440
    
    
    
    73,911
    
    
    
    843,120
 - 21 -




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Geographic Segment Information
 Years ended March 312008
    
    2007
    
    2006
    
    2008(millions of yen)
    
    
    
    
    (thousandsof dollars)JAPANNet sales (1)
    
    ¥
    390,364
    
    
    ¥
    397,147
    
    
    ¥
    360,210
    
    
    $
    3,903,640Operating income
    
    
    35,257
    
    
    
    31,277
    
    
    
    49,437
    
    
    
    352,570Identifiable assets
    
    
    414,009
    
    
    
    363,203
    
    
    
    347,942
    
    
    
    4,140,090NORTH AND SOUTH AMERICANet sales (1)
    
    
    103,248
    
    
    
    111,689
    
    
    
    105,979
    
    
    
    1,032,480Operating income
    
    
    7,905
    
    
    
    7,869
    
    
    
    9,995
    
    
    
    79,050Identifiable assets
    
    
    82,128
    
    
    
    99,585
    
    
    
    100,611
    
    
    
    821,280EUROPENet sales (1)
    
    
    54,418
    
    
    
    84,329
    
    
    
    76,240
    
    
    
    544,180Operating income (loss)
    
    
    (4,056
    )
    
    
    (3
    )
    
    
    (9,996
    )
    
    
    (40,560
    )Identifiable assets
    
    
    37,917
    
    
    
    50,941
    
    
    
    45,729
    
    
    
    379,170ASIA AND
OTHERSNet sales (1)
    
    
    636,242
    
    
    
    572,979
    
    
    
    531,824
    
    
    
    6,362,420Operating income
    
    
    44,397
    
    
    
    41,515
    
    
    
    12,607
    
    
    
    443,970Identifiable assets
    
    
    396,348
    
    
    
    387,002
    
    
    
    348,008
    
    
    
    3,963,480ELIMINATIONS
AND CORPORATENet sales (1)
    
    
    317,987
    
    
    
    304,119
    
    
    
    279,073
    
    
    
    3,179,870Operating income (loss)
    
    
    3,672
    
    
    
    (1,068
    )
    
    
    (1,520
    )
    
    
    36,720Identifiable assets
    
    
    5,131
    
    
    
    88,573
    
    
    
    81,213
    
    
    
    51,310TOTALNet sales
    
    ¥
    866,285
    
    
    ¥
    862,025
    
    
    ¥
    795,180
    
    
    $
    8,662,850Operating income
    
    
    87,175
    
    
    
    79,590
    
    
    
    60,523
    
    
    
    871,750Identifiable and corporate assets
    
    
    935,533
    
    
    
    989,304
    
    
    
    923,503
    
    
    
    9,355,330OVERSEAS
SALES (2)Americas
    
    ¥
    96,287
    
    
    ¥
    103,124
    
    
    ¥
    90,192
    
    
    $
    962,870Europe
    
    
    59,128
    
    
    
    83,545
    
    
    
    75,895
    
    
    
    591,280Asia and others
    
    
    558,757
    
    
    
    504,004
    
    
    
    455,435
    
    
    
    5,587,570Overseas sales total
    
    ¥
    714,172
    
    
    ¥
    690,673
    
    
    ¥
    621,522
    
    
    $
    7,141,720Percentage of consolidated sales
    
    
    82.4
    %
    
    
    80.1
    %
    
    
    78.2
    %
    
    
    82.4
    %
 Notes:(1)
    
    Net sales in each geographic area are based on the location of TDK
entities where the sales are generated.(2)
    
    Overseas sales are based on the location of the customers. - 22 -




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Sales
          - 23 -




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Net Sales Geographic Segments
     Effect of foreign exchange movements
   - 24 -




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Cost and expenses
    Other income and deductions
  - 25 -




---



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Income taxes and minority interests
  Net income
   - 26 -




---



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Sales
         - 27 -




---



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Net Sales Geographic Segments
  - 28 -




---



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Effect of foreign exchange movements
    - 29 -




---



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Cost and expenses
    Other income and deductions
  Income taxes and minority interests
  - 30 -




---



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Net income
    - 31 -




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Discontinued Operations
   Yen (Millions)2006Net sales
    
    ¥
    45Loss from operations before income taxes (including loss on
disposal of ¥224 million in 2006)
    
    
    310Income tax expense
    
    
    Loss from discontinued operations
    
    ¥
    310
  - 32 -




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B.
    
    Liquidity and capital resources
 Financing requirements
         Capital Expenditures
    - 33 -




---



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TDKs financing policy and capital procurement
     - 34 -




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Liquidity and funding sources
      Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (millionsof dollars)Income from continuing operations
    
    ¥
    71,461
    
    
    ¥
    70,125
    
    
    ¥
    44,411
    
    
    $
    714.6Adjustments to reconcile to net cash
provided by operating activities
    
    
    47,952
    
    
    
    75,358
    
    
    
    44,707
    
    
    
    479.5Net cash provided by operating activities
    
    
    119,413
    
    
    
    145,483
    
    
    
    89,118
    
    
    
    1,194.1Net cash used in investing activities
    
    
    (157,747
    )
    
    
    (81,488
    )
    
    
    (104,782
    )
    
    
    (1,577.5
    )Net cash used in financing activities
    
    
    (60,086
    )
    
    
    (15,862
    )
    
    
    (7,125
    )
    
    
    (600.8
    )Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (414
    )
    
    
    Effect of exchange rate changes on cash
and cash equivalents
    
    
    (24,644
    )
    
    
    2,019
    
    
    
    10,712
    
    
    
    (246.4
    )Net increase (decrease) in cash and cash
equivalents
    
    ¥
    (123,064
    )
    
    ¥
    50,152
    
    
    ¥
    (12,491
    )
    
    $
    (1,230.6
    )
   - 35 -




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- 36 -




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Years ended March 312008
    
    
    2007
    
    
    2006
    
    
    2008(millions of yen)
    
    
    (millions(%)
    
    
    
    
    
    
    of dollars)Short-term debt
    
    ¥
    8,898
    
    
    ¥
    3,013
    
    
    ¥
    4,469
    
    
    $
    89.0(1.2
    )
    
    
    (0.4
    )
    
    
    (0.6
    )Current installments of long-term debt
    
    
    294
    
    
    
    514
    
    
    
    1,958
    
    
    
    2.9(0.1
    )
    
    
    (0.0
    )
    
    
    (0.3
    )Long-term
debt, excluding current installments
    
    
    152
    
    
    
    532
    
    
    
    405
    
    
    
    1.5(0.0
    )
    
    
    (0.1
    )
    
    
    (0.1
    )Stockholders equity
    
    
    716,577
    
    
    
    762,712
    
    
    
    702,419
    
    
    
    7,165.8(98.7
    )
    
    
    (99.5
    )
    
    
    (99.0
    )Total capital
    
    ¥
    725,921
    
    
    ¥
    766,771
    
    
    ¥
    709,251
    
    
    $
    7,259.2(100.0
    )
    
    
    (100.0
    )
    
    
    (100.0
    )
   - 37 -




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- 38 -




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Sale of business to Imation Corp.
   Restructuring Costs
   - 39 -




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- 40 -




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C.
    
    Research and development, patents and licenses, etc.
      
    
    The Materials R&D Center is responsible for research in magnetic and dielectric
materials that use powder metallurgy.
    
    The Advanced Process Technology Center facilitates the use of cutting-edge process
technologies.
    
    The Devices Development Center conducts research in new devices.
    
    The Application Center devises the necessary applied technologies with the aim of
keeping TDK in step with market trends and customer needs.
   - 41 -




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D.
    
    Trend information
 Economic environment
       - 42 -




---



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- 43 -




---



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- 44 -




---



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- 45 -




---



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Critical accounting policies
    Impairment of long-lived assets
   Valuation of inventories
   - 46 -




---



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Purchase Accounting
    Goodwill and other intangible assets
  Pension benefit costs
     - 47 -




---



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Deferred tax assets
  - 48 -




---



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New accounting pronouncementsNew Accounting Standards
      - 49 -




---



##### Table of Contents



E.
    
    Off-Balance Sheet Arrangements
  F.
    
    Tabular Disclosure of Contractual Obligations
   Payments Due by Period (Yen in millions)Less than
    
    1 to 3
    
    3 to 5
    
    After 5Total
    
    1 year
    
    years
    
    years
    
    yearsContractual obligations:Long-term debt
    
    ¥
    446
    
    
    
    294
    
    
    
    130
    
    
    
    22
    
    
    
    Operating leases
    
    
    19,001
    
    
    
    4,965
    
    
    
    6,156
    
    
    
    3,179
    
    
    
    4,701Contributions to
defined benefit plans
    
    
    4,423
    
    
    
    4,423
    
    
    
    
    
    
    
    
    
    
    
    Purchase commitment
of raw materials
    
    
    7,189
    
    
    
    5,805
    
    
    
    1,384
    
    
    
    
    
    
    
    Purchase commitment
of property, plant
and equipment
    
    
    32,855
    
    
    
    32,855
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    63,914
    
    
    
    48,342
    
    
    
    7,670
    
    
    
    3,201
    
    
    
    4,701
 Note:The table does not include provisions for uncertain tax positions and related accrued interest
and penalties, as the specific timing of future payments related to these obligations cannot
be projected with reasonable certainty. See Note 8, Income Taxes in the Notes to Consolidated
Financial Statements for further details. - 50 -




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G.
    
    Safe Harbor
   - 51 -




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##### Table of Contents



Item 6.
    
    Directors, Senior Management and Employees
 A.
    
    Directors and senior management
  Directors
 Name (Date of birth)
    
    Position, responsibility and brief personal recordHajime Sawabe
    
    Representative Director, Chairperson and CEO  since June 2006(Jan. 9, 1942)
    
    
    
    
    
    Director of TDK since June 1996
    
    
    Appointed Representative Director, President, and CEO in June 1998Takehiro Kamigama
    
    Representative Director, President and COO  since June 2006(Jan. 12, 1958)
    
    
    
    
    
    Appointed General Manager of TDK Data Storage Components Business Group in October 2001
    
    
    Corporate Officer of TDK since June 2002
    
    
    Appointed Senior Vice President of TDK in June 2003
    
    
    Appointed General Manager of TDK Data Storage and Thin Film Technology Components Business Group in June 2003
    
    
    Appointed Director, Executive Vice President of TDK in June 2004Seiji Enami
    
    Director, Executive Vice President and CFO since June 2008(Sep. 14, 1947)
    
    In charge of TDK General Manager of Administration Group and Environment
    
    
    Appointed General Manager of TDK Recording Media and Systems Business Group Industrial Sales Department in
April 2000
    
    
    Appointed General Manager of TDK Finance and Accounting Department in April 2001
    
    
    CFO of TDK since June 2004
    
    
    Director of TDK since June 2005
    
    
    Appointed Senior Vice President of TDK in June 2007
    
    
    General Manager of TDK Administration Group and Environment since June 2008Shinji Yoko
    
    Director, Senior Vice President  since June 2002(Jan. 2, 1948)
    
    In charge of TDK General Manager of Electronic Components Sales and Marketing Group
    
    
    Director of TDK since June 1998
    
    
    Appointed Deputy General Manager of TDK Electronic Components Business Group, General Manager of High
Frequency Devices Division in April 2000
    
    
    General Manager of TDK Electronic Components Sales and Marketing Group since June 2002
 - 52 -




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##### Table of Contents



Name (Date of birth)
    
    Position, responsibility and brief personal recordYasuhiro Hagihara
    
    Director (outside)  since June 2002(Oct. 19, 1937)
    
    
    
    
    
    Admitted to the bar in Washington D.C., U.S.A. in April 1971
    
    
    Elected Partner of Graham & James L.L.P. in January 1979
    
    
    Partner of Squire, Sanders & Dempsey L.L.P. since July 2000
    
    
    Gaikokuhou Jimu Bengoshi at Squire Sanders Gaikokuhou Kyodo Jigyo Horitsu Jimusho since August 2001
    
    
    Keio University, Department of Law adjunct professor since April 2002Minoru Takahashi
    
    Director, Senior Vice President  since June 2007(Feb. 12, 1948)
    
    In charge of General Manager of TDK Technology Group, General Manager of Materials & Process Development
Center and Technology, Intellectual Properties
    
    
    Appointed General Manager of TDK Sensors and Actuators Business Division, General Manager of Business
Promotions Department in April 2002
    
    
    Appointed Corporate Officer of TDK in June 2003
    
    
    Appointed General Manager of TDK Sensors and Actuators Business Group in October 2003
    
    
    Appointed General Manager of TDK Technology Group, General Manager of Devices Development Center and
Technology, Intellectual Properties in April 2005
    
    
    Senior Vice President of TDK since June 2006
    
    
    General Manager of TDK Technology Group, General Manager of Materials & Process Development Center and
Technology, Intellectual Properties since April 2007Kenichi Mori
    
    Director (outside)  since June 2008(Sep. 28, 1938)
    
    
    
    
    
    Entered into Toshiba Corporation, Research and Development Center in April 1962
    
    
    Appointed Director of Toshiba Corporation, General Manager of Information Equipment Group in June 1994
    
    
    Appointed Executive Director of the same company in June 1996
    
    
    Appointed Executive Director of Toshiba Tec Corporation in June 1998
    
    
    Appointed President of the same company in June 1999
    
    
    Professor at Tokyo University of Science MOT Graduate School since April 2004
    
    
    Program Director at the Japan Science and Technology Agency, a semi governmental organization since April 2004
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Corporate Officers
 Name (Date of birth)
    
    Position, responsibility and brief personal recordTakeshi Nomura
    
    Corporate Officer, Senior Vice President  since June 2002(Mar. 8, 1952)
    
    In charge of General Manager of Ferrite and Magnet Products Business Group
    
    
    Appointed Director of TDK in June 1998
    
    
    Appointed General Manager of TDK Materials Research Center, General Manager of Intellectual Properties Center
in July 2002
    
    
    Appointed General Manager of TDK Materials Research Center, General Manager of Intellectual Properties
Center, General Manager of Information Technology Research Center and Technology in July 2003
    
    
    Appointed General Manager of TDK Technology Group, General Manager of Intellectual Properties Center and
Technology in January 2004
    
    
    Appointed General Manager of TDK Technology Group, General Manager of TDK Intellectual Properties Center,
General Manager of TDK Devices Development Center and Technology in July 2004
    
    
    General Manager of TDK Ferrite and Magnet Products Business Group since April 2005Takaya Ishigaki
    
    Corporate Officer, Senior Vice President  since June 2005(Apr. 10, 1953)
    
    In charge of General Manager of Capacitors Business Group
    
    
    Appointed Deputy General Manager of TDK Circuit Devices Business Group, Capacitor Group Senior Manager,
General Manager of Multilayer Ceramics Manufacturing Department in October 2001
    
    
    Appointed Corporate Officer of TDK in June 2003
    
    
    Appointed General Manager of TDK Circuit Devices Business Group, Capacitor Group Senior Manager in April 2005
    
    
    General Manager of TDK Capacitors Business Group since April 2007Raymond Leung
    
    Corporate Officer, Senior Vice President  since June 2007(Apr. 18, 1956)
    
    In charge of General Manager of China Operation Group, Chairman of SAE Magnetics (H.K.) Ltd.
    
    
    Appointed President of SAE Magnetics (H.K.) Ltd. in October 2000
    
    
    Appointed Deputy General Manager of TDK Data Storage and Thin Film Technology Components Business Group in
June 2004
    
    
    Appointed TDK Corporate Officer in June 2004
    
    
    Appointed Vice Chairman of SAE Magnetics (H.K.) Ltd. in April 2005
    
    
    General Manager of TDK China Operation Group since April 2005
    
    
    Chairman of SAE Magnetics (H.K.) Ltd. since July 2006
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Name (Date of birth)
    
    Position, responsibility and brief personal recordShiro Nomi
    
    Corporate Officer, Senior Vice President  since June 2007(May 8, 1949)
    
    In charge of General Manager of Corporate Strategy Group and Corporate Planning Department
    
    
    Appointed General Manager of TDK Corporate Planning Department in July 2000
    
    
    Appointed General Manager of TDK Corporate Strategy Corporate Planning Department in October 2001
    
    
    Appointed TDK Corporate Officer in June 2005
    
    
    Appointed General Manager of TDK Corporate Strategy Management Review & Support Department in April 2006
    
    
    General Manager of TDK Corporate Strategy Group and Corporate Planning Department since June 2008Shinichi Araya
    
    Corporate Officer, Senior Vice President  since June 2007(Mar. 7, 1952)
    
    In charge of General Manager of Magnetics Business Group
    
    
    Appointed General Manager of TDK Mechatronics Division in January 1999
    
    
    Appointed General Manager of TDK Mechatronics Division, General Manager of Production Engineering Development
Department in April 2000
    
    
    Appointed Deputy General Manager of TDK Production Engineering Development Center in April 2001
    
    
    Appointed General Manager of TDK Production Engineering Development Department in October 2001
    
    
    Appointed Deputy General Manager of TDK Circuit Devices Business Group, Inductor Group Senior Manager in
April 2002
    
    
    Appointed TDK Corporate Officer in June 2005
    
    
    General Manager of TDK Magnetics Business Group since April 2007Takeo Suzuki
    
    Corporate Officer, Senior Vice President  since April 2008(Mar. 12, 1944)
    
    In charge of General Manager of Power Systems Business Group
    
    
    Appointed Senior Vice President of Kenwood Corporation in June 1996
    
    
    Representative Director, President of Densei-Lambda K.K. since February 2000
    
    
    General Manager of Power Systems Business Group since April 2008Kenichiro Fujihara
    
    Corporate Officer  since June 2007(Jul. 23, 1949)
    
    In charge of Deputy General Manager of Electronic Components Sales & Marketing Group
    
    
    Appointed General Manager of TDK Electronic Components Sales & Marketing Group Sales Division 1 in April 2003
    
    
    Deputy General Manager of TDK Electronic Components Sales & Marketing Group since April 2006
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Name (Date of birth)
    
    Position, responsibility and brief personal recordShinya Yoshihara
    
    Corporate Officer  since June 2007(May 31, 1955)
    
    In charge of General Manager of Technology Group Production Engineering Development Center
    
    
    Appointed General Manager of TDK Technology Group Production Engineering Development Department in April 2002
    
    
    General Manager of TDK Technology Group Production Engineering Development Center since January 2004Atsuo Kobayashi
    
    Corporate Officer  since June 2008(Jan. 7, 1960)
    
    In charge of General Manager of Data Storage & Thin Film Technology Components Business Group
    
    
    Appointed Deputy General Manager of Data Storage & Thin Film Technology Components Business Group, HDD Heads
Business Division Japan Operation Leader in July 2006
    
    
    General Manager of Data Storage & Thin Film Technology Components Business Group since April 2007Junji Yoneyama
    
    Corporate Officer  since June 2008(Mar. 16, 1955)
    
    In charge of General Manager of TDK Human Resources Department
    
    
    Appointed President of TDK Philippines Corporation in January 2002
    
    
    Appointed General Manager of Ichikawa Technical Center General Affairs Department, Narita General Affairs
Department in June 2003
    
    
    Appointed Vice President of TDK Taiwan Corporation in July 2004
    
    
    Appointed President of TDK Taiwan Corporation in April 2005
    
    
    General Manager of TDK Human Resources Department since October 2006
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Company Auditors
 Name (Date of birth)
    
    Position, responsibility and brief personal recordNoboru Hara
(Dec. 24, 1949)
    
    Full-time Company Auditor  since June 2007
      Appointed General Manager of TDK Administration Group General Affairs Department in
October 2001Masaaki Miyoshi
(Sep. 3, 1947)
    
    Full-time Company Auditor  since June 2003
      Appointed
President of Korea TDK Co., Ltd. in July 2000Kaoru Matsumoto
(Dec. 8, 1947)
    
    Company Auditor (outside)  since June 2003
      Registration
as a Certified Public Accountant in March 1976
      Establishment of Kaoru Matsumoto & Co. since November 1977Ryoichi Ohno
(Nov. 3, 1958)
    
    Company Auditor (outside)  since June 2004
      Appointed Senior Vice President and Chief Financial Officer
of The Gibraltar Life Insurance Co., Ltd. in September 2001
      Appointed Finance Vice President of Prudential Financial
Inc. in September 2001
      Appointed Executive Vice President and Chief Financial
Officer of The Gibraltar Life Insurance Co., Ltd. in July
2005
      Director of Prudential Life Insurance Co., Ltd. since July
2006
      Prudential Financial Inc., Japan Representative Office
Regional CFO-Japan (USGAAP Reporting) since February 2007Yukio Yanase
(Jun. 15, 1944)
    
    Company Auditor (outside)  since June 2007
      Appointed Deputy President of ORIX Corporation in February
2005
      Appointed Director and Deputy President of ORIX Corporation
in June 2005
      Director and Representative Executive Officer and President
of ORIX Corporation since January 2008
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B.
    
    Compensation
 (1)
    
    The aggregate direct remuneration, including bonuses but excluding retirement allowances,
paid by TDK during the years ended March 31, 2008 and 2007 to all Directors and Company
Auditors of TDK who served during each of those years was approximately ¥315 million ($3,150
thousand) and ¥285 million ($2,850 thousand), respectively. During fiscal 2008, TDKs
Directors and Corporate Officers as of June 27, 2008 received 71 and 70 stock acquisition
rights as stock options, respectively. Each right represents an option to purchase 100 shares
of common stock of TDK. Further details regarding the grants are listed below. For a
discussion of other material terms of the issuance of these stock acquisitions rights, please
see Item 6.E. Share ownership. TDK does not disclose individual remuneration for each
Director and Company Auditor and aggregate direct remuneration for Corporate Officers except
for compensation in the form of stock acquisition rights, because such disclosure is not
required under Japanese law. Company Auditors do not receive stock acquisition rights.
 Number of stockacquisition rightsgranted individuallyName
    
    Position
    
    during fiscal 2008DirectorsHajime Sawabe
    
    Representative Director,
Chairperson and CEO
    
    
    20Takehiro Kamigama
    
    Representative Director,
President and COO
    
    
    20Seiji Enami
    
    Director, Executive Vice
President and CFO
    
    
    10Shinji Yoko
    
    Director, Senior Vice President
    
    
    10Yasuhiro Hagihara
    
    Director (outside)
    
    
    1Minoru Takahashi
    
    Director, Senior Vice President
    
    
    10Kenichi Mori
    
    Director (outside)
    
    71Corporate OfficersTakeshi Nomura
    
    Corporate Officer, Senior Vice President
    
    
    9Takaya Ishigaki
    
    Corporate Officer, Senior Vice President
    
    
    9Raymond Leung
    
    Corporate Officer, Senior Vice President
    
    
    10Shiro Nomi
    
    Corporate Officer, Senior Vice President
    
    
    9Shinichi Araya
    
    Corporate Officer, Senior Vice President
    
    
    9Takeo Suzuki
    
    Corporate Officer, Senior Vice President
    
    Kenichiro Fujihara
    
    Corporate Officer
    
    
    4Shinya Yoshihara
    
    Corporate Officer
    
    
    4Atsuo Kobayashi
    
    Corporate Officer
    
    
    8Junji Yoneyama
    
    Corporate Officer
    
    
    870
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(2)
    
    TDK stopped providing for retirement allowances for directors from the day after TDKs Board of
Directors passed a resolution on June 27, 2002 abolishing the directors retirement allowance
system. Consequently, current directors remuneration other than outside directors comprises
monthly remuneration, a results-linked bonus and stock options for a stock-linked compensation
plan, and does not include retirement allowances. Outside Directors remuneration comprises
monthly remuneration. Directors retirement allowances reserved through June 27, 2002 will be
paid to applicable directors when they retire upon approval by TDKs General Meeting of
Shareholders. The retirement allowance system for TDKs company auditors was abolished by a
resolution of the Board of Company Auditors on March 22, 2007. Accordingly, TDK stopped
providing reserves for retirement allowances for company auditors from the day after the
111th Ordinary General Meeting of Shareholders held on June 28, 2007. Consequently,
current company auditors remuneration comprises only monthly remuneration stipulated by TDKs
internal regulations, and does not include retirement allowances. Company auditors retirement
allowances reserved through June 28, 2007, will be paid to applicable company auditors when they
retire upon approval by TDKs General Meeting of Shareholders. The total amount of company
auditors retirement allowances provided for as of March 31, 2008 and 2007 was approximately ¥2
million ($20,000) and approximately ¥14 million ($140,000), respectively.
  C.
    
    Board practices
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Significant differences in corporate governance practices between TDK and U.S. listed
companies on the New York Stock Exchange
 1.
    
    Directors Independence
 kansayaku-kai
   2.
    
    Definition of Independent Director
   
    
    The director is, or has been within the last three years, an employee of the listed
company, or an immediate family member is, or has been within the last three years, an
executive officer, of the listed company.
    
    The director has received, or has an immediate family member who has received, during
any twelve-month period within the last three years, more than $100,000 in direct
compensation from the listed company, other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided such compensation is not
contingent in any way on continued service).
    
    The director or an immediate family member is a current partner of a firm that is the
companys internal or external auditor; the director is a current employee of such a firm;
the director has an immediate family member who is a current employee of such a firm and
who participates in the firms audit, assurance or tax compliance (but not tax planning)
practice; or the director or an immediate family member was within the
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last three years (but is no longer) a partner or employee of such a firm and personally
worked on the listed companys audit within that time.
    
    The director or an immediate family member is, or has been within the last three years,
employed as an executive officer of another company where any of the listed companys
present executive officers at the same time serves or served on that companys compensation
committee.
    
    The director is a current employee, or an immediate family member is a current executive
officer, of a company that has made payments to, or received payments from, the listed
company for property or services in an amount which, in any of the last three fiscal years,
exceeds the greater of $1 million, or 2 % of such other companys consolidated gross
revenues.
   3.
    
    Company Auditors
  kaikei sanyo
  4.
    
    Regularly Scheduled Sessions without Management
  5.
    
    Nominating / Corporate Governance Committee
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6.
    
    Compensation Committee
    (1)
    
    With respect to any item of compensation in a definitive amount, such amount;(2)
    
    With respect to any item of compensation not in a definitive amount, a concrete
method for the calculation thereof; and(3)
    
    With respect to non-monetary items as compensation, the specific contents
thereof.
 7.
    
    Audit Committee
  (i)
    
    TDK has a Board of Company Auditors (kansayaku-kai) established and selected
pursuant to the Companies Act;(ii)
    
    The Companies Act requires the board of company auditors to be separate from
the board of directors;
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(iii)
    
    Under the Companies Act, the company auditors are not elected by management,
but by the shareholders at a shareholders meeting. In addition, no executive officer
of TDK is a member of the Board of Company Auditors;(iv)
    
    The Companies Act prohibits a company auditor from serving as a director,
manager, or other employee of the company or any of its subsidiaries, or as an
accounting advisor (kaikei sanyo) or executive officer of any subsidiary of the
company. The Companies Act requires a Company with Board of Company Auditors to have
at least half of the company auditors thereof be outside auditors as such term is
defined in the Companies Act. As such, the Companies Act provides for the standards
for independence of the Board of Company Auditors from the management of TDK;(v)
    
    The Companies Act provides that an accounting auditor (kaikei kansanin) must be
appointed at a shareholders meeting. However, it also provides that in order to
submit a proposal concerning an appointment of an accounting auditor to a shareholders
meeting, the directors must obtain the consent of the board of company auditors and
that the board of company auditors may demand that the directors include the
appointment of an accounting auditor in the agenda of a shareholders meeting. In
addition, the Companies Act provides that the board of company auditors may dismiss an
accounting auditor for causes such as breach of his or her duties that are enumerated
in the Companies Act. Further, pursuant to the Companies Act and Company Accounting
Regulations thereunder, the board of company auditors audit the financial statements
separately from an audit by the accounting auditor, and if the board of company
auditors believes that the manner or result of an audit by the accounting auditors is
not reasonable, it must indicate its objections and the reasons therefor in the audit
report. To this end, a company auditor may, if necessary for the performance of
his/her duties, request the accounting auditor to provide a report thereon. As such,
in accordance with the Companies Act, the Board of Company Auditors of TDK is
responsible, to the extent permitted by law, for the appointment, retention, and
supervision of the work of a registered public accounting firm engaged for the purpose
of preparing or issuing an audit report or performing other audit, review or attest
services for TDK; and(vi)
    
    Under Japanese law, the establishment of the procedures for the receipt,
retention, and treatment of complaints and their confidential, anonymous submission by
employees is a responsibility of the board of directors, not the company auditors or
the board of company auditors, and thus, the Board of Directors of TDK has established
such procedures. Each Company Auditor of TDK may, however, investigate the status of
such procedures at any time and state his/her opinion at a meeting of the Board of
Directors if he/she considers it necessary. In addition, each Company Auditor of TDK
has the authority to engage independent counsel and other advisers if such engagement
is necessary to carry out his/her duties. Furthermore, each Company Auditor may
require TDK to pay any and all expenses necessary for carrying out his/her duties,
including compensation of any advisers employed by him/her and ordinary administrative
expenses.
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8.
    
    Corporate Governance Guidelines
  9.
    
    Code of Business Conduct and Ethics
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D.
    
    Employees
  As of March 31, 2008
    
    Japan
    
    Overseas
    
    TotalElectronic materials and components
    
    
    7,904
    
    
    
    49,324
    
    
    
    57,228Recording media
    
    
    628
    
    
    
    413
    
    
    
    1,041Corporate
    
    
    1,851
    
    
    
    92
    
    
    
    1,943Total
    
    
    10,383
    
    
    
    49,829
    
    
    
    60,212As of March 31, 2007
    
    Japan
    
    Overseas
    
    TotalElectronic materials and components
    
    
    7,724
    
    
    
    40,520
    
    
    
    48,244Recording media
    
    
    881
    
    
    
    802
    
    
    
    1,683Corporate
    
    
    1,644
    
    
    
    43
    
    
    
    1,687Total
    
    
    10,249
    
    
    
    41,365
    
    
    
    51,614As of March 31, 2006
    
    Japan
    
    Overseas
    
    TotalElectronic materials and components
    
    
    7,697
    
    
    
    42,419
    
    
    
    50,116Recording media
    
    
    993
    
    
    
    1,258
    
    
    
    2,251Corporate
    
    
    1,516
    
    
    
    40
    
    
    
    1,556Total
    
    
    10,206
    
    
    
    43,717
    
    
    
    53,923
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E.
    
    Share ownership
  Number ofshares ofNumber of
    
    common stockshares of
    
    underlyingcommon
    
    stock acquisi-Name
    
    Position
    
    stock
    
    tion rightsHajime Sawabe
    
    Representative Director, Chairperson and CEO
    
    
    11,000
    
    
    
    37,500Takehiro Kamigama
    
    Representative Director, President and COO
    
    
    3,300
    
    
    
    31,700Seiji Enami
    
    Director, Executive Vice President and CFO
    
    
    1,100
    
    
    
    4,400Shinji Yoko
    
    Director, Senior Vice President
    
    
    3,000
    
    
    
    22,900Yasuhiro Hagihara
    
    Director (outside)
    
    
    1,000
    
    
    
    2,700Minoru Takahashi
    
    Director, Senior Vice President
    
    
    1,000
    
    
    
    5,600Kenichi Mori
    
    Director (outside)
    
    
    
    
    
    
    Takeshi Nomura
    
    Corporate Officer, Senior Vice President
    
    
    1,000
    
    
    
    30,000Takaya Ishigaki
    
    Corporate Officer, Senior Vice President
    
    
    
    
    
    
    7,500Raymond Leung
    
    Corporate Officer, Senior Vice President
    
    
    3,600
    
    
    
    2,000Shiro Nomi
    
    Corporate Officer, Senior Vice President
    
    
    300
    
    
    
    3,900Shinichi Araya
    
    Corporate Officer, Senior Vice President
    
    
    
    
    
    
    2,400Takeo Suzuki
    
    Corporate Officer, Senior Vice President
    
    
    
    
    
    Kenichiro Fujihara
    
    Corporate Officer
    
    
    100
    
    
    
    1,700Shinya Yoshihara
    
    Corporate Officer
    
    
    500
    
    
    
    4,100Atsuo Kobayashi
    
    Corporate Officer
    
    
    
    
    
    
    2,600Junji Yoneyama
    
    Corporate Officer
    
    
    
    
    
    
    2,400Noboru Hara
    
    Full-time Company Auditor
    
    
    500
    
    
    
    1,600Masaaki Miyoshi
    
    Full-time Company Auditor
    
    
    1,000
    
    
    
    Kaoru Matsumoto
    
    Company Auditor (outside)
    
    
    
    
    
    
    Ryoichi Ohno
    
    Company Auditor (outside)
    
    
    
    
    
    
    Yukio Yanase
    
    Company Auditor (outside)
    
    
    
    
    
    
    Total
    
    
    
    
    27,400
    
    
    
    163,000
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Stock option plans
    Kaisha-ho
      Kaisha-ho
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Employees
  Title of class
    
    Identity of person or group
    
    
    Amount owned
    
    
    Percent of classCommon stock
    
    TDK Employees Shareholding Association
    
    458,654 shares
    
    
    0.36%
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Item 7.
    
    Major Shareholders and Related Party Transactions
 A.
    
    Major shareholders
  Shares ownedName of major shareholder
    
    (in thousands)
    
    PercentageJapan Trustee Services Bank, Ltd. (Trust account)
    
    
    13,157
    
    
    
    10.15
    %The Master Trust Bank of Japan, Ltd. (Trust account)
    
    
    12,532
    
    
    
    9.67
    %
     B.
    
    Related party transaction
  C.
    
    Interests of experts and counsel
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Item 8.
    
    Financial Information
 A.
    
    Consolidated statements and other financial information
 Consolidated financial statements
   Export sales
  Legal proceedings
  Dividend policy
  B.
    
    Significant changes
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Item 9.
    
    The Offer and Listing
 A.
    
    Offer and listing details
   U.S. marketYen per share of
    
    
    price per AmericanCommon stock (1)
    
    

Depositary Share(2)High
    
    
    Low
    
    
    High
    
    
    LowAnnual highs and lowsYear ended March 31, 2004
    
    
    8,350
    
    
    
    3,810
    
    
    
    77.86
    
    
    
    32.40Year ended March 31, 2005
    
    
    8,630
    
    
    
    6,790
    
    
    
    80.10
    
    
    
    61.40Year ended March 31, 2006
    
    
    10,230
    
    
    
    7,250
    
    
    
    85.40
    
    
    
    62.50Year ended March 31, 2007
    
    
    10,360
    
    
    
    7,990
    
    
    
    89.00
    
    
    
    69.89Year ended March 31, 2008
    
    
    11,990
    
    
    
    5,790
    
    
    
    99.25
    
    
    
    57.50Quarterly highs and lowsYear ended March 31, 20071st quarter
    
    
    10,000
    
    
    
    7,990
    
    
    
    89.00
    
    
    
    69.892nd quarter
    
    
    9,470
    
    
    
    8,190
    
    
    
    80.49
    
    
    
    70.493rd quarter
    
    
    9,920
    
    
    
    8,520
    
    
    
    83.04
    
    
    
    73.554th quarter
    
    
    10,360
    
    
    
    9,120
    
    
    
    87.96
    
    
    
    77.76Year ended March 31, 20081st quarter
    
    
    11,940
    
    
    
    9,770
    
    
    
    97.08
    
    
    
    81.902nd quarter
    
    
    11,990
    
    
    
    8,720
    
    
    
    99.25
    
    
    
    74.253rd quarter
    
    
    10,490
    
    
    
    7,150
    
    
    
    90.49
    
    
    
    66.144th quarter
    
    
    8,210
    
    
    
    5,790
    
    
    
    75.26
    
    
    
    57.50Year ending March 31, 20091st quarter
    
    
    7,410
    
    
    
    5,670
    
    
    
    70.17
    
    
    
    59.40Monthly highs and lowsFebruary 2008
    
    
    8,210
    
    
    
    6,820
    
    
    
    75.26
    
    
    
    63.50March 2008
    
    
    7,350
    
    
    
    5,790
    
    
    
    70.00
    
    
    
    58.76April 2008
    
    
    7,150
    
    
    
    5,670
    
    
    
    68.96
    
    
    
    59.40May 2008
    
    
    7,340
    
    
    
    6,670
    
    
    
    70.13
    
    
    
    64.34June 2008
    
    
    7,410
    
    
    
    6,330
    
    
    
    70.17
    
    
    
    59.85July 2008
(through July 25)
    
    
    6,710
    
    
    
    6,100
    
    
    
    62.30
    
    
    
    57.80
 
 Notes:(1)
    
    As reported by the Tokyo Stock Exchange.(2)
    
    As reported by the New York Stock Exchange. B.
    
    Plan of distribution
  - 74 -




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##### Table of Contents



C.
    
    Markets
  D.
    
    Selling shareholders
  E.
    
    Dilution
  F.
    
    Expenses of the issue
  - 75 -




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##### Table of Contents



Item 10.
    
    Additional Information
 A.
    
    Share capital
  B.
    
    Memorandum and articles of association
 Organization
 (kabushiki kaisha (Shoho) Kaishaho (shogyo tokibo)
 Objects and purposes
  (1)
    
    Manufacture and sale of electric machinery and appliances;(2)
    
    Manufacture and sale of magnetic materials such as ferrite and magnet;(3)
    
    Manufacture and sale of electronic machinery and appliances such as automatic
inserting machine for electronic components, automatic mounter for electronic
components, and electronic measuring equipment and of components thereof;(4)
    
    Manufacture and sale of recording media such as magnetic tape, floppy disk and
optical disk and of data writing, reading and storage equipment therefor;(5)
    
    Manufacture and sale of ceramic materials such as electricity inductive ceramics,
piezoelectric ceramics, semiconductor ceramics and electricity insulating ceramics;(6)
    
    Manufacture and sale of circuit components such as coils and transformers;(7)
    
    Manufacture and sale of semiconductor;(8)
    
    Manufacture and sale of stabilizing power supplies (units to stabilize electric
current or voltage);(9)
    
    Manufacture and sale of machinery and appliances for medical use and medical
instruments and of components thereof;(10)
    
    Manufacture and sale of single crystal materials and each product applying the
same;(11)
    
    Manufacture and sale of precious metals, precious stones, artificial precious
stones and each product applying or utilizing the same;(12)
    
    Manufacture and sale of outer wall materials of buildings and structures;(13)
    
    Designing and contracting of construction work;(14)
    
    Development, production, sale and grant of license of software;
 - 76 -




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##### Table of Contents



(15)
    
    Manufacture, sale and contracting of applied product, machinery and tools and
equipment of each of the foregoing; and(16)
    
    Any and all businesses incidental or relating to each of the foregoing.
 Directors
 :
 (a)
    
    a director is not entitled to vote on a proposal or arrangement or contract in
which the director has a special interest;(b)
    
    the remuneration and retirement allowances for directors are determined at a
general meeting of shareholders and within the upper limit approved at the shareholders
meeting, the Board of Directors will determine the amount of compensation for each
director, however, the Board of Directors may, by its resolution, leave such decision to
the discretion of the companys Representative Director;(c)
    
    the Board of Directors have authority to approve long-term borrowing of ¥10
billion or more by resolution passed at a duly convened meeting of the Board of
Directors. The Representative Director is authorized by the Board of Directors to make
final decisions with respect to long-term borrowings in an amount less than ¥10 billion
and short-term borrowings (including issuance of commercial paper);(d)
    
    there are no provisions requiring the mandatory retirement of directors at a
specified age; and(e)
    
    share ownership is not required in order to be eligible to serve as a director.
 Common Stock
 General
   - 77 -




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##### Table of Contents



Authorized capital
    - 78 -




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##### Table of Contents



Dividends
 i.e.
 (a)
    
    TDKs Articles of Incorporation provide that the Board of Directors has the
authority to determine to make distributions of Surplus;(b)
    
    the normal term of office of TDKs directors terminates on or prior to the date
of conclusion of the ordinary general meeting of shareholders held for the last business
year ending within one year from the election of the directors; and(c)
    
    TDKs non-consolidated annual financial statements and certain documents for the
latest business year present fairly its assets and profit or loss, as required by the
Regulations of Company Accounting of Japan (February 7, 2006, the Ministry of Justice
Ordinance No. 13) (the Company Accounting Regulations).
    Restriction on Distributions of Surplus
  - 79 -




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##### Table of Contents



(a)
    
    the book value of TDKs treasury stock;(b)
    
    the amount of consideration for the treasury stock disposed of by TDK after the end of the
last business year; and(c)
    
    certain other amounts set forth in the Company Accounting Regulations, including (if the sum
of one-half of goodwill and deferred assets (X) does not exceed the total of stated capital,
capital reserves, retained earnings reserves (Y) and other capital surplus, each such amount
being that appearing on the non-consolidated balance sheet as of the end of the last fiscal
year) X minus Y.
 - 80 -




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##### Table of Contents



renketsu
haito kisei tekiyo kaisha
  Share splits
   Consolidation of shares
  General meeting of shareholders
  - 81 -




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Votes
 Unit share system,
below
        - 82 -




---



##### Table of Contents




    
    a reduction in amount of stated capital,
    
    amendment of the Articles of Incorporation (except amendments which the Board
of Directors are authorized to make under the Companies Act as described in
Share Splits and Unit Share Systems),
    
    establishment of a 100 percent parent-subsidiary relationship by way of share
exchange or share transfer,
    
    a dissolution, merger or consolidation,
    
    a company split,
    
    the transfer of the whole or an important part of the Companys business,
    
    the taking over of the whole of the business of any other corporation,
    
    any issuance of new shares at a particularly favorable price, stock
acquisition rights (shinkabu yoyakuken) with particularly favorable
conditions or bonds with stock acquisition rights (shinkabu yoyakuken-tsuki
shasai) with particularly favorable conditions to persons other than
shareholders,
    
    exemption of part of Directors or Company Auditors liabilities to the Company,
    
    distribution of Surplus in kind with respect to which shareholders are not
granted the right to require the Company to make such distribution in cash
instead of in kind,
    
    purchase of shares by the Company from a specific shareholder other than its
subsidiaries, and
    
    consolidation of shares.
 Subscription rights
 Votes
 - 83 -




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##### Table of Contents



Stock acquisition rights
  Liquidation rights
  Liability to Further Calls or Assessments
  Administrator of Shareholders Registry
  Record date
   Acquisition of TDKs treasury shares
  - 84 -




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##### Table of Contents



Distribution of Surplus
 Votes
  Unit share system
     - 85 -




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##### Table of Contents



Reporting of substantial shareholdings
     C.
    
    Material contracts
  - 86 -




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##### Table of Contents



D.
    
    Exchange controls
 Japanese Foreign Exchange Regulations
   
    
    individuals who do not reside in Japan; and
    
    corporations whose principal offices are not located in Japan.
   
    
    individuals who do not reside in Japan;
    
    corporations which are organized under the laws of foreign
countries or whose principal offices are located outside
Japan;
    
    corporations in which more than 50 percent of the shares are
held (directly or indirectly) by individuals who do not reside
in Japan and/or corporations which are organized under the
laws of foreign countries or whose principal offices are
located outside Japan; and
    
    entities a majority of the officers (or officers having the power of
representation) of which are persons who do not reside in Japan, who or which make a
foreign direct investment as defined in the Foreign Exchange Law.
    - 87 -




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- 88 -




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##### Table of Contents



E.
    
    Taxation
  Japanese Tax
     - 89 -




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##### Table of Contents



U.S. Tax
  
    
    certain financial institutions;
    
    insurance companies;
    
    dealers and traders in securities or foreign currencies;
    
    persons holding TDK shares or ADRs as part of a hedge, straddle,
conversion or other integrated transaction;
    
    persons whose functional currency for U.S. federal income tax purposes
is not the U.S. dollar;
    
    partnerships or other entities classified as partnerships for U.S.
federal income tax purposes;
    
    persons liable for the alternative minimum tax;
    
    tax-exempt organizations;
    
    persons holding TDK shares or ADRs that own or are deemed to own 10
percent or more of any class of TDK stock; or
    
    persons who acquired TDK shares or ADRs pursuant to the exercise of
any employee stock option or otherwise as compensation.
   
    
    a citizen or resident of the United States;
    
    a corporation, or other entity taxable as a corporation, created or
organized in or under the laws of the United States or any political
subdivision thereof; or
    
    an estate or trust the income of which is subject to U.S. federal
income taxation regardless of its source.
 - 90 -




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##### Table of Contents



United States Taxation with respect to shares of Common Stock and ADRs
 Taxation of Capital Gains
  Taxation of Dividends
   - 91 -




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##### Table of Contents



Passive Foreign Investment Companies
  
    
    gain realized on the sale or other disposition of shares or ADRs ; and
    
    any excess distributions to a U.S. holder (generally, an excess distribution is
any distribution from a PFIC during a single taxable year that is greater than 125
percent of the average annual distributions received by a U.S. holder in respect of
the shares or ADRs during the three preceding taxable years or, if shorter, such
U.S. holders holding period for the shares or ADRs).
  
    
    the gain or excess distribution will be allocated ratably over the holding
period for the shares or ADRs,
    
    the amount allocated to the taxable year in which the U.S holder realized the
gain or excess distribution and any taxable year prior to the first year in which
TDK was a PFIC will be taxed as ordinary income,
    
    the amount allocated to each other year, with certain exceptions, will be taxed
at the highest tax rate in effect for that year, and
    
    the interest charge generally applicable to underpayments of tax will be imposed
in respect of the tax attributable to each such year.
   - 92 -




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##### Table of Contents



Treaty Between U.S. and Japan
   Foreign Tax Credit
  Information Reporting and Backup Withholding
   F.
    
    Dividends and paying agents
  - 93 -




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##### Table of Contents



G.
    
    Statements by experts
  H.
    
    Documents on display
  I.
    
    Subsidiary information
  - 94 -




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##### Table of Contents



Item 11.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Foreign exchange risk
    2008
    
    
    2007Forward exchange contracts(millions of yen)
    
    
    Average
    
    
    (millions of yen)
    
    
    AverageContract
    
    
    Fair
    
    
    contractual
    
    
    Contract
    
    
    Fair
    
    
    contractualamounts
    
    
    value
    
    
    rate
    
    
    amounts
    
    
    value
    
    
    rateTo sell USD / receive Baht
    
    ¥
    6,232
    
    
    ¥
    (218
    )
    
    
    32.66
    
    
    ¥
    
    
    
    ¥
    
    
    
    
    To sell Baht / receive USD
    
    
    6,012
    
    
    
    168
    
    
    
    32.41
    
    
    
    
    
    
    
    
    
    
    
    To sell Euro / receive Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,677
    
    
    
    (4
    )
    
    
    155.92To sell USD / receive Yen
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,604
    
    
    
    78
    
    
    
    120.11To sell USD / receive Euro
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153
    
    
    
    (2
    )
    
    
    13.12Total
    
    ¥
    12,244
    
    
    ¥
    (50
    )
    
    
    
    
    
    ¥
    8,434
    
    
    ¥
    72
 2008
    
    2007Currency option contracts
    
    (millions of yen)
    
    Average
    
    
    (millions of yen)
    
    AverageContract
    
    
    Fair
    
    
    contractual
    
    
    Contract
    
    
    Fair
    
    
    contractualamounts
    
    
    value
    
    
    rate
    
    
    amounts
    
    
    value
    
    
    rateTo sell USD / receive USD
    
    ¥
    1,080
    
    
    ¥
    18
    
    
    
    108.00
    
    
    ¥
    5,400
    
    
    ¥
    82
    
    
    
    120.00Total
    
    ¥
    1,080
    
    
    ¥
    18
    
    
    
    
    
    
    ¥
    5,400
    
    
    ¥
    82
 Interest rate risk
  - 95 -




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##### Table of Contents



Stock price risk
   2008
    
    
    2007Yen (Millions)
    
    
    Yen (Millions)Cost
    
    Gross
    
    
    Gross
    
    
    Fair value
    
    
    Cost
    
    
    Gross
    
    
    Gross
    
    
    Fair valueunrealized
    
    
    unrealized
    
    
    
    
    
    
    
    
    
    
    unrealized
    
    
    unrealizedholding
    
    
    holding
    
    
    
    
    
    
    
    
    
    
    holding
    
    
    holdinggains
    
    
    losses
    
    
    
    
    
    
    
    
    
    
    gains
    
    
    losses¥ 22,800
    
    2,276
    
    
    
    4,039
    
    
    
    21,037
    
    
    
    11,919
    
    
    
    3,566
    
    
    
    488
    
    
    
    14,997
 
 Item 12.
    
    Description of Securities Other than Equity Securities
  - 96 -




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PART II
 
 Item 13.
    
    Defaults, Dividend Arrearages and Delinquencies
  
 Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15.
    
    Controls and Procedures
      (1)
    
    pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the company;(2)
    
    provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and(3)
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of TDKs assets that could have a material
effect on the financial statements.
 - 97 -




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##### Table of Contents



Internal Control-Integrated Framework
   .
   
 Item 15T.
    
    Controls and Procedures
  
 Item 16A.
    
    Audit Committee Financial Expert
 Significant differences in corporate governance practices between TDK and U.S. listed companies on
the New York Stock Exchange
 - 98 -




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##### Table of Contents



Item 16B.
    
    Code of Ethics
  
 Item 16C.
    
    Principal Accountant Fees and Services
  (Yen in millions)Years ended March 312008
    
    2007Audit fees
    
    
    1,154
    
    
    
    1,071Audit-related fees
    
    
    44
    
    
    
    14Tax fees
    
    
    206
    
    
    
    308All other fees
    
    
    15
    
    
    
    19Total
    
    
    1,419
    
    
    
    1,412
    Audit and Non-Audit Services Pre-Approval Policy
  - 99 -




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##### Table of Contents



(i)
    
    The Retainer has received a letter of confirmation from such public accounting
firm that the public accounting firm is neither the Outside Auditor nor a person
associated with the Outside Auditor; and(ii)
    
    The Retainer has confirmed that such public accounting firm does not appear on
the list of persons associated with the Outside Auditor, which is contained in the
database system (Pre-Approval Database) within the TDK intranet system.
      (i)
    
    the service to be rendered shall fall under any of the types listed in above
explanation for audit fees, audit-related fees and tax fees;(ii)
    
    the engagement to render the service shall commence within one year from the time
when the Board of Directors adopts the Audit Policy;(iii)
    
    the fee for the service to be rendered shall be less than 40,000,000 yen
(Individual Fee Limit); and(iv)
    
    the total amount of fees payable to the Outside Auditor by TDK on account of
non-audit services with respect to any fiscal year shall not exceed the total amount of
audit fees payable to the Outside Auditor by TDK with respect to such year (Overall Fee
Limit).
 
 - 100 -




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##### Table of Contents



(i)
    
    Whether the Outside Auditor cannot function in the role of management;(ii)
    
    Whether the Outside Auditor cannot audit its own work; and(iii)
    
    Whether the Outside Auditor cannot serve in an advocacy role for its client.
  
 Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
   
    
    the Board of Company Auditors is established pursuant to the Companies Act;
    
    as required by the Companies Act, the Board of Company Auditors is separate from the
Board of Directors;
    
    the Board of Company Auditors is not elected by the management of TDK and no executive
officer of TDK is a member of the Board of Company Auditors;
    
    the Companies Act provides for the standards for independence of the Board of Company
Auditors from the management of TDK;
    
    in accordance with the Companies Act, the Board of Company Auditors of TDK is
responsible, to the extent permitted by law, for the appointment, retention and supervision
of the work of a registered public accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review or attest services for TDK; and
 - 101 -




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##### Table of Contents




    
    Under the Companies Act, the establishment of the procedures for the receipt, retention,
and treatment of complaints and their confidential, anonymous submission by employees is a
responsibility of the Board of Directors, not the Company Auditors or the Board of Company
Auditors, and thus, the Board of Directors of TDK has established such procedures. In
addition, each Company Auditor of TDK has the authority to engage independent counsel and
other advisers if such engagement is necessary to carry out his/her duties. Furthermore,
each Company Auditor may require TDK to pay any and all expenses necessary for carrying out
his/her duties, including compensation of any advisers employed by him/her and ordinary
administrative expenses.
  
 Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Total Number
    
    Maximumof Shares
    
    Number ofPurchased as
    
    Shares that MayTotal
    
    
    Average
    
    
    Part of Publicly
    
    Yet BeNumber
    
    
    Price Paid
    
    
    Announced
    
    Purchased Underof Shares
    
    per Share
    
    Plans or
    
    the Plans orPeriod
    
    Purchased
    
    (Yen)
    
    Programs
    
    ProgramsApril 1 to April 30, 2007
    
    
    73
    
    
    
    10,270.96
    
    
    
    
    
    
    
    May 1 to May 31, 2007
    
    
    190
    
    
    
    10,244.16
    
    
    
    3,599,000
    
    
    
    June 1 to June 30, 2007
    
    
    58
    
    
    
    11,418.10
    
    
    
    
    
    
    
    July 1 to July 31, 2007
    
    
    493
    
    
    
    11,408.62
    
    
    
    
    
    
    
    August 1 to August 31, 2007
    
    
    121
    
    
    
    9,475.37
    
    
    
    
    
    
    
    September 1 to September 30, 2007
    
    
    17
    
    
    
    9,728.82
    
    
    
    
    
    
    
    October 1 to October 31, 2007
    
    
    343
    
    
    
    9,989.74
    
    
    
    
    
    
    
    November 1 to November 30, 2007
    
    
    290
    
    
    
    8,387.10
    
    
    
    
    
    
    
    December 1 to December 31, 2007
    
    
    217
    
    
    
    8,223.13
    
    
    
    
    
    
    
    January 1 to January 31, 2008
    
    
    94
    
    
    
    8,237.87
    
    
    
    
    
    
    
    February 1 to February 29, 2008
    
    
    29
    
    
    
    7,606.90
    
    
    
    
    
    
    
    March 1 to March 31, 2008
    
    
    336
    
    
    
    7,017.50
    
    
    
    
    
    
    
    Total
    
    
    2,261
    
    
    
    9,416.53
    
    
    
    3,599,000
    
    
    
    
 
 Note:
    
    Under the Companies Act, a holder of shares constituting less than one full unit may request
TDK to purchase such shares at their market value (See Item 10. Additional
InformationCommon Stock Unit share
system). All purchases described in the above table
were made pursuant to such requests by shareholders. - 102 -




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##### Table of Contents



PART III
 
 Item 17.
    
    Financial Statements
  PageReport of Independent Registered Public Accounting Firm
    
    
    104Consolidated Statements of Income
for the years ended March 31, 2008, 2007 and 2006
    
    
    106Consolidated Balance Sheets as of March 31, 2008 and 2007
    
    
    107Consolidated Statements of Stockholders Equity
for the years ended March 31, 2008, 2007 and 2006
    
    
    109Consolidated Statements of Cash Flows
for the years ended March 31, 2008, 2007 and 2006
    
    
    110Notes to Consolidated Financial Statements
    
    
    111Schedule for the years ended March 31, 2008, 2007 and 2006:Schedule II  Valuation and Qualifying Accounts
    
    
    156
   - 103 -




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Report of Independent Registered Public Accounting Firm
 
        
 - 104 -




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Report of Independent Registered Public Accounting Firm
 
        
 - 105 -




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##### Table of Contents



Consolidated statements of income
 U.S. DollarsYen
    
    (Thousands)(Millions)
    
    (Note 2)2008
    
    
    2007
    
    
    2006
    
    
    2008Net sales (Notes 21 and 26)
    
    ¥
    866,285
    
    
    
    862,025
    
    
    
    795,180
    
    
    $
    8,662,850Cost of sales (Note 26)
    
    
    635,529
    
    
    
    622,819
    
    
    
    585,780
    
    
    
    6,355,290Gross profit
    
    
    230,756
    
    
    
    239,206
    
    
    
    209,400
    
    
    
    2,307,560Selling, general and administrative expenses (Note 26)
    
    
    158,921
    
    
    
    159,106
    
    
    
    142,052
    
    
    
    1,589,210Gain on sale of business to Imation Corp. (Note 24)
    
    
    (15,340
    )
    
    
    
    
    
    
    
    
    
    
    (153,400
    )Restructuring cost (Note 17)
    
    
    
    
    
    
    510
    
    
    
    6,825
    
    
    
    Operating income
    
    
    87,175
    
    
    
    79,590
    
    
    
    60,523
    
    
    
    871,750Other income (deductions):Interest and dividend income
    
    
    8,284
    
    
    
    7,025
    
    
    
    3,605
    
    
    
    82,840Interest expense
    
    
    (218
    )
    
    
    (200
    )
    
    
    (149
    )
    
    
    (2,180
    )Equity in earnings of affiliates
    
    
    1,969
    
    
    
    1,489
    
    
    
    1,368
    
    
    
    19,690Gain (loss) on securities, net (Note 4)
    
    
    (2,081
    )
    
    
    (212
    )
    
    
    (286
    )
    
    
    (20,810
    )Foreign exchange gain (loss)
    
    
    (3,670
    )
    
    
    973
    
    
    
    948
    
    
    
    (36,700
    )Other  net
    
    
    46
    
    
    
    0
    
    
    
    94
    
    
    
    4604,330
    
    
    
    9,075
    
    
    
    5,580
    
    
    
    43,300Income from continuing operations
before income taxes
    
    
    91,505
    
    
    
    88,665
    
    
    
    66,103
    
    
    
    915,050Income taxes (Note 8)
    
    
    19,948
    
    
    
    16,985
    
    
    
    21,057
    
    
    
    199,480Income from continuing operations
before minority interests
    
    
    71,557
    
    
    
    71,680
    
    
    
    45,046
    
    
    
    715,570Minority interests, net of tax
    
    
    96
    
    
    
    1,555
    
    
    
    635
    
    
    
    960Income from continuing operations
    
    
    71,461
    
    
    
    70,125
    
    
    
    44,411
    
    
    
    714,610Discontinued operations (Note 22):Loss from operations of discontinued business
(including loss on disposal of ¥224 million in 2006)
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    Net income
    
    ¥
    71,461
    
    
    
    70,125
    
    
    
    44,101
    
    
    $
    714,610
 Amounts per share:
 Yen (except number of
    
    
    U.S. Dollarscommon shares outstanding)
    
    
    (Note 2)Income from continuing operations per share (Note 20):Basic
    
    ¥
    551.72
    
    
    
    529.88
    
    
    
    335.84
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    335.54
    
    
    
    5.51Loss from discontinued operations per share (Note 20):Basic
    
    
    
    
    
    
    
    
    
    
    (2.34
    )
    
    
    Diluted
    
    
    
    
    
    
    
    
    
    
    (2.34
    )
    
    
    Net income per share (Note 20):Basic
    
    ¥
    551.72
    
    
    
    529.88
    
    
    
    333.50
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    333.20
    
    
    
    5.51Weighted average basic common shares
outstanding (in thousands) (Note 20)
    
    
    129,525
    
    
    
    132,342
    
    
    
    132,239Weighted average diluted common shares
outstanding (in thousands) (Note 20)
    
    
    129,649
    
    
    
    132,488
    
    
    
    132,355Cash dividends paid during the year (Note 10)
    
    ¥
    120.00
    
    
    
    100.00
    
    
    
    80.00
    
    
    $
    1.20
 See accompanying notes to consolidated financial statements.
 - 106 -




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##### Table of Contents



Consolidated balance sheets
 U.S. DollarsYen
    
    
    (Thousands)(Millions)
    
    
    (Note 2)ASSETS
    
    2008
    
    
    2007
    
    
    2008Current assets:Cash and cash equivalents
    
    ¥
    166,105
    
    
    
    289,169
    
    
    $
    1,661,050Short-term investments
    
    
    1,179
    
    
    
    11,071
    
    
    
    11,790Marketable securities (Note 4)
    
    
    3,986
    
    
    
    1,063
    
    
    
    39,860Trade receivables (Note 21):Notes
    
    
    7,925
    
    
    
    9,546
    
    
    
    79,250Accounts (Note 26)
    
    
    153,175
    
    
    
    175,079
    
    
    
    1,531,750Allowance for doubtful receivables
    
    
    (3,982
    )
    
    
    (6,311
    )
    
    
    (39,820
    )Net trade receivables
    
    
    157,118
    
    
    
    178,314
    
    
    
    1,571,180Inventories (Note 6)
    
    
    88,816
    
    
    
    89,789
    
    
    
    888,160Income tax receivables (Note 8)
    
    
    1,340
    
    
    
    276
    
    
    
    13,400Assets held for sale (Note 18)
    
    
    919
    
    
    
    2,125
    
    
    
    9,190Prepaid expenses and other current
assets (Notes 8 and 26)
    
    
    43,357
    
    
    
    43,563
    
    
    
    433,570Total current assets
    
    
    462,820
    
    
    
    615,370
    
    
    
    4,628,200Investments in securities(Notes 4 and 5)
    
    
    68,714
    
    
    
    32,641
    
    
    
    687,140Property, plant and equipment, at cost:Land
    
    
    23,161
    
    
    
    21,696
    
    
    
    231,610Buildings
    
    
    194,248
    
    
    
    194,005
    
    
    
    1,942,480Machinery and equipment
    
    
    546,362
    
    
    
    508,972
    
    
    
    5,463,620Construction in progress
    
    
    22,229
    
    
    
    14,605
    
    
    
    222,290786,000
    
    
    
    739,278
    
    
    
    7,860,000Less accumulated depreciation
    
    
    (518,851
    )
    
    
    (492,575
    )
    
    
    (5,188,510
    )Net property, plant and equipment
    
    
    267,149
    
    
    
    246,703
    
    
    
    2,671,490Goodwill(Note 19)
    
    
    30,020
    
    
    
    17,539
    
    
    
    300,200Intangible assets(Note 19)
    
    
    63,322
    
    
    
    31,005
    
    
    
    633,220Deferred income taxes(Note 8)
    
    
    11,257
    
    
    
    9,666
    
    
    
    112,570Other assets(Notes 9 and 13)
    
    
    32,251
    
    
    
    36,380
    
    
    
    322,510¥
    935,533
    
    
    
    989,304
    
    
    $
    9,355,330
 See accompanying notes to consolidated financial statements.
 - 107 -




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##### Table of Contents



U.S. DollarsYen
    
    
    (Thousands)(Millions)
    
    
    (Note 2)LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS EQUITY
    
    2008
    
    
    2007
    
    
    2008Current liabilities:Short-term debt (Note 7)
    
    ¥
    8,898
    
    
    
    3,013
    
    
    $
    88,980Current installments of long-term debt (Note 7)
    
    
    294
    
    
    
    514
    
    
    
    2,940Trade payables:Notes
    
    
    2,981
    
    
    
    4,155
    
    
    
    29,810Accounts (Note 26)
    
    
    73,410
    
    
    
    77,616
    
    
    
    734,100Accrued salaries and wages
    
    
    23,858
    
    
    
    24,562
    
    
    
    238,580Accrued expenses (Notes 9, 17 and 26)
    
    
    39,976
    
    
    
    36,555
    
    
    
    399,760Income taxes payables (Note 8)
    
    
    7,660
    
    
    
    13,245
    
    
    
    76,600Other current liabilities (Note 8)
    
    
    4,884
    
    
    
    5,880
    
    
    
    48,840Total current liabilities
    
    
    161,961
    
    
    
    165,540
    
    
    
    1,619,610Long-term debt, excluding current installments(Note 7)
    
    
    152
    
    
    
    532
    
    
    
    1,520Retirement and severance benefits(Note 9)
    
    
    33,990
    
    
    
    32,290
    
    
    
    339,900Deferred income taxes(Note 8)
    
    
    5,998
    
    
    
    7,526
    
    
    
    59,980Other noncurrent liabilities(Note 8)
    
    
    13,171
    
    
    
    6,501
    
    
    
    131,710Total liabilities
    
    
    215,272
    
    
    
    212,389
    
    
    
    2,152,720Minority interests
    
    
    3,684
    
    
    
    14,203
    
    
    
    36,840Commitments and contingent liabilities(Notes 13 and 14)Stockholders equity:Common stockAuthorized 480,000,000 shares;
issued 129,590,659 shares in 2008;
and 133,189,659 shares in 2007
outstanding 128,955,736 shares in 2008
and 132,434,205 shares in 2007
    
    
    32,641
    
    
    
    32,641
    
    
    
    326,410Additional paid-in capital
    
    
    63,887
    
    
    
    63,695
    
    
    
    638,870Legal reserve (Note 10)
    
    
    19,510
    
    
    
    18,844
    
    
    
    195,100Retained earnings (Note 10)
    
    
    688,719
    
    
    
    671,350
    
    
    
    6,887,190Accumulated other comprehensive income (loss)
(Notes 8, 9 and 12)
    
    
    (81,583
    )
    
    
    (17,846
    )
    
    
    (815,830
    )Treasury stock at cost; 634,923 shares in 2008
and 755,454 shares in 2007 (Note 11)
    
    
    (6,597
    )
    
    
    (5,972
    )
    
    
    (65,970
    )Total stockholders equity
    
    
    716,577
    
    
    
    762,712
    
    
    
    7,165,770¥
    935,533
    
    
    
    989,304
    
    
    $
    9,355,330
 - 108 -




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##### Table of Contents



Consolidated statements of stockholders equity
 Yen (Millions)AccumulatedotherAdditional paid-
    
    
    
    
    
    Retained
    
    comprehensive
    
    
    
    
    
    Total stock-Common stock
    
    in capital
    
    Legal reserve
    
    earnings
    
    income (loss)
    
    Treasury stock
    
    holders equity(Note 10)
    
    (Note 10)
    
    (Note 8, 9 and 12)
    
    (Note 11)Balance at March 31, 2005
    
    ¥
    32,641
    
    
    ¥
    63,051
    
    
    ¥
    16,918
    
    
    ¥
    585,557
    
    
    ¥
    (51,657
    )
    
    ¥
    (7,443
    )
    
    ¥
    639,067Non-cash compensation charges
under stock option plans
    
    
    
    
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,578
    )
    
    
    
    
    
    
    
    
    
    
    (10,578
    )Transferred to legal reserve
    
    
    
    
    
    
    
    
    
    
    599
    
    
    
    (599
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,101
    
    
    
    
    
    
    
    
    
    
    
    44,101Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,100
    
    
    
    
    
    
    
    26,100Minimum pension liability
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,719
    
    
    
    
    
    
    
    2,719Net unrealized gains (losses)
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    892
    
    
    
    
    
    
    
    892Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,812Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (955
    )
    
    
    (955
    )Exercise of stock option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (222
    )
    
    
    
    
    
    
    1,109
    
    
    
    887Balance at March 31, 2006
(as previously reported)
    
    ¥
    32,641
    
    
    ¥
    63,237
    
    
    ¥
    17,517
    
    
    ¥
    618,259
    
    
    ¥
    (21,946
    )
    
    ¥
    (7,289
    )
    
    ¥
    702,419Adjustment for the cumulative
effect on prior years of
the adoption of SAB
No. 108 (Note 1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,287
    )
    
    
    
    
    
    
    
    
    
    
    (2,287
    )Balance at March 31, 2006
(after adjustment)
    
    
    32,641
    
    
    
    63,237
    
    
    
    17,517
    
    
    
    615,972
    
    
    
    (21,946
    )
    
    
    (7,289
    )
    
    
    700,132Non-cash compensation charges
under stock option plans
    
    
    
    
    
    
    458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    458Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,230
    )
    
    
    
    
    
    
    
    
    
    
    (13,230
    )Transferred to legal reserve
    
    
    
    
    
    
    
    
    
    
    1,327
    
    
    
    (1,327
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70,125
    
    
    
    
    
    
    
    
    
    
    
    70,125Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,383
    
    
    
    
    
    
    
    4,383Minimum pension liability
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,290
    
    
    
    
    
    
    
    2,290Net unrealized gains (losses)
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    76Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,874Adjustment to initially apply
SFAS 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,649
    )
    
    
    
    
    
    
    (2,649
    )Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32
    )
    
    
    (32
    )Exercise of stock option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (190
    )
    
    
    
    
    
    
    1,349
    
    
    
    1,159Balance at March 31, 2007
    
    ¥
    32,641
    
    
    ¥
    63,695
    
    
    ¥
    18,844
    
    
    ¥
    671,350
    
    
    ¥
    (17,846
    )
    
    ¥
    (5,972
    )
    
    ¥
    762,712Non-cash compensation charges
under stock option plans
    
    
    
    
    
    
    375
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375Adjustment for change in equity
method interest
    
    
    
    
    
    
    (134
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (134
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,683
    )
    
    
    
    
    
    
    
    
    
    
    (15,683
    )Transferred to legal reserve
    
    
    
    
    
    
    
    
    
    
    666
    
    
    
    (666
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,461
    
    
    
    
    
    
    
    
    
    
    
    71,461Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,757
    )
    
    
    
    
    
    
    (55,757
    )Pension liability adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,684
    )
    
    
    
    
    
    
    (4,684
    )Net unrealized gains (losses)
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,296
    )
    
    
    
    
    
    
    (3,296
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,724Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,250
    )
    
    
    (39,250
    )Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,410
    )
    
    
    
    
    
    
    37,410
    
    
    
    Exercise of stock option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333
    )
    
    
    
    
    
    
    1,215
    
    
    
    882Adjustment for employee stock
awards to be reclassified as a
liability
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )Balance at March 31, 2008
    
    ¥
    32,641
    
    
    ¥
    63,887
    
    
    ¥
    19,510
    
    
    ¥
    688,719
    
    
    ¥
    (81,583
    )
    
    ¥
    (6,597
    )
    
    ¥
    716,577U.S. Dollars (Thousands) (Note 2)Balance at March 31, 2007
    
    $
    326,410
    
    
    $
    636,950
    
    
    $
    188,440
    
    
    $
    6,713,500
    
    
    $
    (178,460
    )
    
    $
    (59,720
    )
    
    $
    7,627,120Non-cash compensation charges
under stock option plans
    
    
    
    
    
    
    3,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,750Adjustment for change in equity
method interest
    
    
    
    
    
    
    (1,340
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,340
    )Cash dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156,830
    )
    
    
    
    
    
    
    
    
    
    
    (156,830
    )Transferred to legal reserve
    
    
    
    
    
    
    
    
    
    
    6,660
    
    
    
    (6,660
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    714,610
    
    
    
    
    
    
    
    
    
    
    
    714,610Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (557,570
    )
    
    
    
    
    
    
    (557,570
    )Pension liability adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,840
    )
    
    
    
    
    
    
    (46,840
    )Net unrealized gains (losses)
on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,960
    )
    
    
    
    
    
    
    (32,960
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,240Acquisition of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (392,500
    )
    
    
    (392,500
    )Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (374,100
    )
    
    
    
    
    
    
    374,100
    
    
    
    Exercise of stock option
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,330
    )
    
    
    
    
    
    
    12,150
    
    
    
    8,820Adjustment for employee stock
awards to be reclassified as a
liability
    
    
    
    
    
    
    (490
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (490
    )Balance at March 31, 2008
    
    $
    326,410
    
    
    $
    638,870
    
    
    $
    195,100
    
    
    $
    6,887,190
    
    
    $
    (815,830
    )
    
    $
    (65,970
    )
    
    $
    7,165,770
  See accompanying notes to consolidated financial statements.
 - 109 -




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##### Table of Contents



Consolidated statements of cash flows
 U.S. DollarsYen
    
    
    (Thousands)(Millions)
    
    
    (Note 2)2008
    
    
    2007
    
    
    2006
    
    
    2008Cash flows from operating activities:Net income
    
    ¥
    71,461
    
    
    
    70,125
    
    
    
    44,101
    
    
    $
    714,610Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    Income from continuing operations
    
    
    71,461
    
    
    
    70,125
    
    
    
    44,411
    
    
    
    714,610Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    71,297
    
    
    
    65,337
    
    
    
    58,540
    
    
    
    712,970Loss on disposal of property and equipment
    
    
    2,955
    
    
    
    2,649
    
    
    
    3,220
    
    
    
    29,550Deferred income taxes
    
    
    (1,885
    )
    
    
    (1,878
    )
    
    
    (696
    )
    
    
    (18,850
    )Loss (gain) on securities, net
    
    
    2,081
    
    
    
    212
    
    
    
    286
    
    
    
    20,810Gain on sale of business to Imation Corp.
    
    
    (15,340
    )
    
    
    
    
    
    
    
    
    
    
    (153,400
    )Gain on sale of a subsidiary
    
    
    (274
    )
    
    
    
    
    
    
    
    
    
    
    (2,740
    )Changes in assets and liabilities, net of effects of acquisition of businesses:Decrease (increase) in trade receivables
    
    
    (13,791
    )
    
    
    11,241
    
    
    
    (16,886
    )
    
    
    (137,910
    )Decrease (increase) in inventories
    
    
    (14,952
    )
    
    
    892
    
    
    
    (287
    )
    
    
    (149,520
    )Decrease (increase) in other current assets
    
    
    (9,090
    )
    
    
    6,202
    
    
    
    (8,748
    )
    
    
    (90,900
    )Increase (decrease) in trade payables
    
    
    16,723
    
    
    
    (5,272
    )
    
    
    7,101
    
    
    
    167,230Increase (decrease) in accrued expenses
    
    
    8,745
    
    
    
    (7,068
    )
    
    
    12,347
    
    
    
    87,450Increase (decrease) in income taxes payables, net
    
    
    (849
    )
    
    
    4,004
    
    
    
    (10,689
    )
    
    
    (8,490
    )Increase (decrease) in other current liabilities
    
    
    1,962
    
    
    
    (1,808
    )
    
    
    216
    
    
    
    19,620Increase (decrease) in retirement and severance benefits, net
    
    
    (2,221
    )
    
    
    (74
    )
    
    
    981
    
    
    
    (22,210
    )Other  net
    
    
    2,591
    
    
    
    921
    
    
    
    (678
    )
    
    
    25,910Net cash provided by operating activities
    
    
    119,413
    
    
    
    145,483
    
    
    
    89,118
    
    
    
    1,194,130Cash flows from investing activities:Capital expenditures
    
    
    (84,312
    )
    
    
    (70,440
    )
    
    
    (73,911
    )
    
    
    (843,120
    )Proceeds from sale and maturity of short-term investments
    
    
    18,508
    
    
    
    20,046
    
    
    
    
    
    
    
    185,080Payment for purchase of short-term investments
    
    
    (8,540
    )
    
    
    (31,089
    )
    
    
    
    
    
    
    (85,400
    )Proceeds from sale and maturity of investments in securities
    
    
    1,177
    
    
    
    23
    
    
    
    4,263
    
    
    
    11,770Payment for purchase of investments in securities
    
    
    (17,834
    )
    
    
    (3,638
    )
    
    
    (4,227
    )
    
    
    (178,340
    )Acquisitions of assets
    
    
    (37,155
    )
    
    
    
    
    
    
    
    
    
    
    (371,550
    )Proceeds from sale of businesses
    
    
    3,264
    
    
    
    
    
    
    
    
    
    
    
    32,640Acquisition of subsidiaries, net of cash acquired
    
    
    (18,182
    )
    
    
    
    
    
    
    (32,868
    )
    
    
    (181,820
    )Acquisition of affiliates
    
    
    (2,206
    )
    
    
    
    
    
    
    
    
    
    
    (22,060
    )Proceeds from sale of tangible and intangible assets
    
    
    3,000
    
    
    
    3,678
    
    
    
    3,373
    
    
    
    30,000Acquisition of minority interests
    
    
    (15,855
    )
    
    
    (6
    )
    
    
    (2,587
    )
    
    
    (158,550
    )Proceeds from sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    1,538
    
    
    
    Other  net
    
    
    388
    
    
    
    (62
    )
    
    
    (363
    )
    
    
    3,880Net cash used in investing activities
    
    
    (157,747
    )
    
    
    (81,488
    )
    
    
    (104,782
    )
    
    
    (1,577,470
    )Cash flows from financing activities:Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    269
    
    
    
    Repayment of long-term debt
    
    
    (9,242
    )
    
    
    (2,143
    )
    
    
    (218
    )
    
    
    (92,420
    )Increase (decrease) in short-term debt, net
    
    
    3,574
    
    
    
    (1,456
    )
    
    
    3,688
    
    
    
    35,740Proceeds from exercise of stock options
    
    
    882
    
    
    
    1,159
    
    
    
    887
    
    
    
    8,820Cash paid to acquire treasury stock
    
    
    (39,250
    )
    
    
    (32
    )
    
    
    (955
    )
    
    
    (392,500
    )Dividends paid
    
    
    (15,683
    )
    
    
    (13,230
    )
    
    
    (10,578
    )
    
    
    (156,830
    )Other  net
    
    
    (367
    )
    
    
    (160
    )
    
    
    (218
    )
    
    
    (3,670
    )Net cash used in financing activities
    
    
    (60,086
    )
    
    
    (15,862
    )
    
    
    (7,125
    )
    
    
    (600,860
    )Cash flows of discontinued operationsOperating cash flows:
    
    
    
    
    
    
    
    
    
    
    (407
    )
    
    
    Investing cash flows:
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    Financing cash flows:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect of exchange rate changes on
cash and cash equivalents from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (414
    )
    
    
    Effect of exchange rate changes on cash and cash equivalents
    
    
    (24,644
    )
    
    
    2,019
    
    
    
    10,712
    
    
    
    (246,440
    )Net increase (decrease) in cash and cash equivalents
    
    
    (123,064
    )
    
    
    50,152
    
    
    
    (12,491
    )
    
    
    (1,230,640
    )Cash and cash equivalents at beginning of period
    
    
    289,169
    
    
    
    239,017
    
    
    
    251,508
    
    
    
    2,891,690Cash and cash equivalents at end of period
    
    ¥
    166,105
    
    
    
    289,169
    
    
    
    239,017
    
    
    $
    1,661,050
 See accompanying notes to consolidated financial statements.
 - 110 -




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##### Table of Contents



1. Nature of Operations and Summary of Significant Accounting Policies
 (a) Nature of Operations
  (i)
    
    Electronic materials and components products:Ferrite cores, Rare-earth magnets, Multilayer ceramic chip
capacitors, Inductors (Coils,
Transformers), Switching power supplies, HDD heads, and Rechargeable batteries(ii)
    
    Recording media products:Audio tapes, Video tapes, CD-Rs, DVDs, and Tape-based data storage media for computers
  (b) Basis of Presentation
   (c) Consolidation Policy
   (d) Cash Equivalents and Short-term Investments
  (e) Allowance for Doubtful Receivables
  - 111 -




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(f) Investments in Securities
     (g) Inventories
   (h) Property, Plant and Equipment
  Buildings
    
    3 to 60 yearsMachinery and equipment
    
    2 to 22 years
 (i) Income Taxes
  - 112 -




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(j) Stock Option Plan
   - 113 -




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##### Table of Contents



Yen(Millions)2006Income from continuing operations, as reported
    
    ¥
    44,411Add compensation expense recognized under intrinsic value
method
    
    
    186Deduct total stock-based employee compensation expense
determined under fair-value-based method for all awards
    
    
    (607
    )Pro forma income from continuing operations
    
    ¥
    43,990
 YenBasic income from continuing operations per share:As reported
    
    ¥
    335.84Pro forma
    
    
    332.66Diluted income from continuing operations per share:As reported
    
    ¥
    335.54Pro forma
    
    
    332.39
 Yen(Millions)2006Net income, as reported
    
    ¥
    44,101Add compensation expense recognized under intrinsic value
method
    
    
    186Deduct total stock-based employee compensation expense
determined under fair-value-based method for all awards
    
    
    (607
    )Pro forma net income
    
    ¥
    43,680
 YenBasic net income per share:As reported
    
    ¥
    333.50Pro forma
    
    
    330.32Diluted net income per share:As reported
    
    ¥
    333.20Pro forma
    
    
    330.05
 (k) Research and Development Expenses
  (l) Advertising Costs
  (m) Shipping and Handling Fees and Costs
  - 114 -




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##### Table of Contents



(n) Foreign Currency Translation
  (o) Use of Estimates
  (p) Accounting for the Impairment of Long-Lived Assets
  (q) Goodwill and Other Intangible Assets
   (r) Derivative Financial Instruments
  (s) Net Income per Share
  - 115 -




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(t) Revenue Recognition
        - 116 -




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(u) Considering the Effects of Prior Year Misstatements
  - 117 -




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(v) New Accounting Standards Not Yet Adopted
       - 118 -




---



##### Table of Contents



(w) Reclassifications
  2. Financial Statement Translation
  3. Foreign Operations
  U.S. DollarsYen (Millions)
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008Net assets
    
    ¥
    499,909
    
    
    
    490,186
    
    
    
    435,381
    
    
    $
    4,999,090Net sales
    
    
    693,993
    
    
    
    674,969
    
    
    
    626,626
    
    
    
    6,939,930Net income
    
    
    48,833
    
    
    
    47,599
    
    
    
    28,582
    
    
    
    488,330
 4. Marketable Securities and Investments in Securities
  U.S. DollarsYen (Millions)
    
    
    (Thousands)2008
    
    
    2007
    
    
    2008Short-term marketable securities
    
    ¥
    3,986
    
    
    
    1,063
    
    
    $
    39,860Long-term marketable securities
    
    
    22,026
    
    
    
    15,912
    
    
    
    220,260Nonmarketable securities
    
    
    426
    
    
    
    357
    
    
    
    4,260Investments in affiliates (Note 5)
    
    
    46,262
    
    
    
    16,372
    
    
    
    462,620¥
    72,700
    
    
    
    33,704
    
    
    $
    727,000
 - 119 -




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##### Table of Contents



As of March 31, 2008
 Gross
    
    
    GrossUnrealized
    
    
    UnrealizedHolding
    
    
    HoldingYen (Millions):
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity securities
    
    ¥
    22,800
    
    
    
    2,276
    
    
    
    4,039
    
    
    
    21,037Debt securities
    
    
    4,972
    
    
    
    3
    
    
    
    
    
    
    
    4,975¥
    27,772
    
    
    
    2,279
    
    
    
    4,039
    
    
    
    26,012
 As of March 31, 2007
 Gross
    
    
    GrossUnrealized
    
    
    UnrealizedHolding
    
    
    HoldingYen (Millions):
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity securities
    
    ¥
    11,919
    
    
    
    3,566
    
    
    
    488
    
    
    
    14,997Debt securities
    
    
    1,983
    
    
    
    
    
    
    
    5
    
    
    
    1,978¥
    13,902
    
    
    
    3,566
    
    
    
    493
    
    
    
    16,975
 As of March 31, 2008
 Gross
    
    
    GrossUnrealized
    
    
    UnrealizedHolding
    
    
    HoldingU.S. Dollars (Thousands):
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity securities
    
    $
    228,000
    
    
    
    22,760
    
    
    
    40,390
    
    
    
    210,370Debt securities
    
    
    49,720
    
    
    
    30
    
    
    
    
    
    
    
    49,750$
    277,720
    
    
    
    22,790
    
    
    
    40,390
    
    
    
    260,120
      - 120 -




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##### Table of Contents



5. Investments in Affiliates
    6. Inventories
  Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Finished goods
    
    ¥
    34,856
    
    
    
    38,546
    
    
    $
    348,560Work in process
    
    
    23,070
    
    
    
    22,158
    
    
    
    230,700Raw materials
    
    
    30,890
    
    
    
    29,085
    
    
    
    308,900¥
    88,816
    
    
    
    89,789
    
    
    $
    888,160
 7. Short-Term and Long-Term Debt
  Yen
    
    U.S. Dollars
    
    Weighted average(Millions)
    
    (Thousands)
    
    interest rate2008
    
    2007
    
    2008
    
    2008
    
    2007Short-term bank
loans  unsecured
    
    ¥
    8,898
    
    
    
    3,013
    
    
    $
    88,980
    
    
    
    1.45
    %
    
    
    1.81
    %
  Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Loans from banks, secured, due fiscal 2010-2012
(weighted average: 2008 - 0.89%, 2007 - 0.93%)
    
    ¥
    165
    
    
    
    255
    
    
    $
    1,650Lease obligation (weighted average: 2008 - 6.03%,
2007 - 5.16%)
    
    
    281
    
    
    
    791
    
    
    
    2,810446
    
    
    
    1,046
    
    
    
    4,460Less current installments
    
    
    294
    
    
    
    514
    
    
    
    2,940¥
    152
    
    
    
    532
    
    
    $
    1,520
 - 121 -




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##### Table of Contents



U.S. DollarsYen (Millions)
    
    (Thousands)Year ending March 31,2009
    
    ¥
    294
    
    
    $
    2,9402010
    
    
    82
    
    
    
    8202011
    
    
    48
    
    
    
    4802012
    
    
    22
    
    
    
    220¥
    446
    
    
    $
    4,460
    8. Income Taxes
   2008
    
    2007
    
    2006Japanese statutory tax rate
    
    
    40.4
    %
    
    
    40.4
    %
    
    
    40.4
    %Expenses not deductible for tax purposes
    
    
    1.1
    
    
    
    1.1
    
    
    
    1.6Non taxable income
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (0.1
    )Difference in statutory tax rates of foreign subsidiaries
    
    
    (15.7
    )
    
    
    (15.0
    )
    
    
    (13.9
    )Change in the valuation allowance
    
    
    1.5
    
    
    
    (1.1
    )
    
    
    4.7Investment tax credit
    
    
    (1.2
    )
    
    
    (0.5
    )
    
    
    (0.1
    )Research and development tax credit
    
    
    (2.8
    )
    
    
    (4.5
    )
    
    
    (1.4
    )Prior-year tax adjustments
    
    
    (0.8
    )
    
    
    (0.6
    )
    
    
    1.4Other
    
    
    (0.5
    )
    
    
    (0.4
    )
    
    
    (0.7
    )Effective tax rate
    
    
    21.8
    %
    
    
    19.2
    %
    
    
    31.9
    %
 - 122 -




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##### Table of Contents



Yen
    
    
    U.S.Dollars(Millions)
    
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008Income from continuing operations
    
    ¥
    19,948
    
    
    
    16,985
    
    
    
    21,057
    
    
    $
    199,480Stockholders equity, accumulated other comprehensive income (loss):Foreign currency translation adjustments
    
    
    914
    
    
    
    4
    
    
    
    8
    
    
    
    9,140Net unrealized gains (losses) on securities
    
    
    (1,534
    )
    
    
    88
    
    
    
    849
    
    
    
    (15,340
    )Minimum pension liability adjustments
    
    
    
    
    
    
    1,037
    
    
    
    2,074
    
    
    
    Pension liability adjustments to initially apply SFAS 158
    
    
    
    
    
    
    (1,022
    )
    
    
    
    
    
    
    Pension liability adjustments
    
    
    (3,396
    )
    
    
    
    
    
    
    
    
    
    
    (33,960
    )Total income taxes
    
    ¥
    15,932
    
    
    
    17,092
    
    
    
    23,988
    
    
    $
    159,320
  Income FromContinuingOperationsBefore Income
    
    Income TaxesTaxes
    
    Current
    
    Deferred
    
    TotalYen (Millions):2008Japanese
    
    ¥
    37,005
    
    
    
    13,615
    
    
    
    718
    
    
    
    14,333Foreign
    
    
    54,500
    
    
    
    8,218
    
    
    
    (2,603
    )
    
    
    5,615¥
    91,505
    
    
    
    21,833
    
    
    
    (1,885
    )
    
    
    19,9482007Japanese
    
    
    35,189
    
    
    
    11,947
    
    
    
    537
    
    
    
    12,484Foreign
    
    
    53,476
    
    
    
    6,916
    
    
    
    (2,415
    )
    
    
    4,50188,665
    
    
    
    18,863
    
    
    
    (1,878
    )
    
    
    16,9852006Japanese
    
    
    28,004
    
    
    
    11,160
    
    
    
    657
    
    
    
    11,817Foreign
    
    
    38,099
    
    
    
    10,593
    
    
    
    (1,353
    )
    
    
    9,24066,103
    
    
    
    21,753
    
    
    
    (696
    )
    
    
    21,057U.S. Dollars
(Thousands):2008Japanese
    
    $
    370,050
    
    
    
    136,150
    
    
    
    7,180
    
    
    
    143,330Foreign
    
    
    545,000
    
    
    
    82,180
    
    
    
    (26,030
    )
    
    
    56,150$
    915,050
    
    
    
    218,330
    
    
    
    (18,850
    )
    
    
    199,480
 - 123 -




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##### Table of Contents



Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Deferred tax assets:Trade accounts receivable, principally due to allowance for doubtful receivables
    
    ¥
    543
    
    
    
    712
    
    
    $
    5,430Inventories
    
    
    1,429
    
    
    
    1,191
    
    
    
    14,290Accrued business tax
    
    
    675
    
    
    
    702
    
    
    
    6,750Accrued expenses
    
    
    6,077
    
    
    
    7,049
    
    
    
    60,770Retirement and severance benefits
    
    
    9,740
    
    
    
    11,298
    
    
    
    97,400Net operating loss carryforwards
    
    
    21,485
    
    
    
    21,132
    
    
    
    214,850Tax credit carryforwards
    
    
    1,911
    
    
    
    1,413
    
    
    
    19,110Pension liability adjustments
    
    
    5,433
    
    
    
    2,247
    
    
    
    54,330Property, plant and equipment, principally due to differences in depreciation
    
    
    4,917
    
    
    
    4,019
    
    
    
    49,170Other
    
    
    1,831
    
    
    
    1,700
    
    
    
    18,310Total gross deferred tax assets
    
    
    54,041
    
    
    
    51,463
    
    
    
    540,410Less valuation allowance
    
    
    (21,039
    )
    
    
    (22,233
    )
    
    
    (210,390
    )Net deferred tax assets
    
    ¥
    33,002
    
    
    
    29,230
    
    
    $
    330,020Deferred tax liabilities:Investments, principally due to differences in valuation
    
    
    (5,729
    )
    
    
    (6,139
    )
    
    
    (57,290
    )Undistributed earnings of foreign subsidiaries and affiliated companies
    
    
    (3,792
    )
    
    
    (3,378
    )
    
    
    (37,920
    )Net unrealized gains on securities
    
    
    (58
    )
    
    
    (1,597
    )
    
    
    (580
    )Acquired intangible assets
    
    
    (7,183
    )
    
    
    (5,255
    )
    
    
    (71,830
    )Other
    
    
    (1,002
    )
    
    
    (1,186
    )
    
    
    (10,020
    )Total gross deferred tax liabilities
    
    
    (17,764
    )
    
    
    (17,555
    )
    
    
    (177,640
    )Net deferred tax assets
    
    ¥
    15,238
    
    
    
    11,675
    
    
    $
    152,380
 
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##### Table of Contents



U.S. DollarsYen (Millions)
    
    (Thousands)Within 1 year
    
    ¥
    3,992
    
    
    $
    39,9201 to 5 years
    
    
    7,080
    
    
    
    70,8005 to 20 years
    
    
    12,898
    
    
    
    128,980Indefinite periods
    
    
    48,085
    
    
    
    480,850¥
    72,055
    
    
    $
    720,550
 
   Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Prepaid expenses and other current assets
    
    ¥
    10,031
    
    
    
    9,615
    
    
    $
    100,310Deferred income taxes (noncurrent assets)
    
    
    11,257
    
    
    
    9,666
    
    
    
    112,570Other current liabilities
    
    
    (52
    )
    
    
    (80
    )
    
    
    (520
    )Deferred income taxes (noncurrent
liabilities)
    
    
    (5,998
    )
    
    
    (7,526
    )
    
    
    (59,980
    )¥
    15,238
    
    
    
    11,675
    
    
    $
    152,380
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##### Table of Contents



Yen (Millions)Balance at April 1, 2007
    
    ¥
    5,420Additions for tax positions of the current year
    
    
    726Additions for tax positions of prior years
    
    
    2,112Reductions for tax positions of prior years
    
    
    (1,795
    )Settlements with taxing authorities during the period
    
    
    (204
    )Other
    
    
    (762
    )Balance at March 31, 2008
    
    ¥
    5,497
     - 126 -




---



##### Table of Contents



9.               Retirement and Severance Benefits
     - 127 -




---



##### Table of Contents



Yen (Millions)2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansChange in benefit obligations:Benefit obligations at beginning of period
    
    ¥
    177,650
    
    
    
    13,335
    
    
    
    180,175
    
    
    
    13,117Service cost
    
    
    5,765
    
    
    
    702
    
    
    
    6,052
    
    
    
    729Interest cost
    
    
    3,845
    
    
    
    593
    
    
    
    3,550
    
    
    
    636Actuarial (gain) loss
    
    
    (936
    )
    
    
    478
    
    
    
    (7,263
    )
    
    
    3Benefits paid
    
    
    (6,151
    )
    
    
    (461
    )
    
    
    (5,094
    )
    
    
    (1,181
    )Curtailment/settlement
    
    
    
    
    
    
    (720
    )
    
    
    
    
    
    
    Sale of business
    
    
    (244
    )
    
    
    (950
    )
    
    
    
    
    
    
    Others
    
    
    (44
    )
    
    
    406
    
    
    
    230
    
    
    
    (71
    )Translation adjustment
    
    
    
    
    
    
    (1,690
    )
    
    
    
    
    
    
    102Benefit obligations at end of period
    
    
    179,885
    
    
    
    11,693
    
    
    
    177,650
    
    
    
    13,335Change in plan assets:Fair value
of plan assets at beginning of period
    
    
    177,877
    
    
    
    7,184
    
    
    
    167,157
    
    
    
    5,703Actual return on plan assets
    
    
    (2,348
    )
    
    
    151
    
    
    
    10,248
    
    
    
    795Employer contributions
    
    
    3,976
    
    
    
    1,237
    
    
    
    4,831
    
    
    
    1,379Benefits paid
    
    
    (4,982
    )
    
    
    (200
    )
    
    
    (4,310
    )
    
    
    (830
    )Curtailment/settlement
    
    
    
    
    
    
    (365
    )
    
    
    
    
    
    
    Sale of business
    
    
    
    
    
    
    (750
    )
    
    
    
    
    
    
    Others
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    Translation adjustment
    
    
    
    
    
    
    (1,055
    )
    
    
    
    
    
    
    137Fair value of plan assets at end of period
    
    
    174,523
    
    
    
    6,202
    
    
    
    177,877
    
    
    
    7,184Funded status
    
    ¥
    (5,362
    )
    
    
    (5,491
    )
    
    
    227
    
    
    
    (6,151
    )U.S. Dollars(Thousands)2008Japanese
    
    Foreignplans
    
    plansChange in benefit obligations:Benefit obligations at beginning of period
    
    $
    1,776,500
    
    
    
    133,350Service cost
    
    
    57,650
    
    
    
    7,020Interest cost
    
    
    38,450
    
    
    
    5,930Actuarial (gain) loss
    
    
    (9,360
    )
    
    
    4,780Benefits paid
    
    
    (61,510
    )
    
    
    (4,610
    )Curtailment/settlement
    
    
    
    
    
    
    (7,200
    )Sale of business
    
    
    (2,440
    )
    
    
    (9,500
    )Others
    
    
    (440
    )
    
    
    4,060Translation adjustment
    
    
    
    
    
    
    (16,900
    )Benefit obligations at end of period
    
    
    1,798,850
    
    
    
    116,930Change in plan assets:Fair value of plan assets at beginning of
period
    
    
    1,778,770
    
    
    
    71,840Actual return on plan assets
    
    
    (23,480
    )
    
    
    1,510Employer contributions
    
    
    39,760
    
    
    
    12,370Benefits paid
    
    
    (49,820
    )
    
    
    (2,000
    )Curtailment/settlement
    
    
    
    
    
    
    (3,650
    )Sale of business
    
    
    
    
    
    
    (7,500
    )Others
    
    
    
    
    
    
    Translation adjustment
    
    
    
    
    
    
    (10,550
    )Fair value of plan assets at end of period
    
    
    1,745,230
    
    
    
    62,020Funded status
    
    $
    (53,620
    )
    
    
    (54,910
    )
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##### Table of Contents



Yen (Millions)2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansOther assets
    
    ¥
    24,450
    
    
    
    
    
    
    
    27,537
    
    
    
    Accrued expenses
    
    
    (1,313
    )
    
    
    
    
    
    
    (1,171
    )
    
    
    Retirement and severance benefits
    
    
    (28,499
    )
    
    
    (5,491
    )
    
    
    (26,139
    )
    
    
    (6,151
    )¥
    (5,362
    )
    
    
    (5,491
    )
    
    
    227
    
    
    
    (6,151
    )
 U.S. Dollars (Thousands)2008Japanese
    
    
    Foreignplans
    
    
    plansOther assets
    
    $
    244,500
    
    
    
    Accrued expenses
    
    
    (13,130
    )
    
    
    Retirement and severance benefits
    
    
    (284,990
    )
    
    
    (54,910
    )$
    (53,620
    )
    
    
    (54,910
    )
  Yen (Millions)2008
    
    
    2007Japanese
    
    
    Foreign
    
    
    Japanese
    
    
    Foreignplans
    
    
    plans
    
    
    plans
    
    
    plansNet actuarial loss
    
    ¥
    33,519
    
    
    
    2,526
    
    
    
    27,438
    
    
    
    2,531Prior service benefit
    
    
    (21,958
    )
    
    
    32
    
    
    
    (23,983
    )
    
    
    100¥
    11,561
    
    
    
    2,558
    
    
    
    3,455
    
    
    
    2,631
 U.S. Dollars (Thousands)2008Japanese
    
    Foreignplans
    
    plansNet actuarial loss
    
    ¥
    335,190
    
    
    
    25,260Prior service benefit
    
    
    (219,580
    )
    
    
    320¥
    115,610
    
    
    
    25,580
  Yen (Millions)2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansAccumulated benefit obligation
    
    ¥
    170,784
    
    
    
    9,669
    
    
    
    165,477
    
    
    
    11,409
 U.S. Dollars (Thousands)2008Japanese
    
    Foreignplans
    
    plansAccumulated benefit obligation
    
    $
    1,707,840
    
    
    
    96,690
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##### Table of Contents



Yen (Millions)2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansPlans with projected benefit
obligations in excess of plan assets:Projected benefit obligations
    
    ¥
    55,138
    
    
    
    11,693
    
    
    
    53,998
    
    
    
    13,335Fair value of plan assets
    
    
    32,869
    
    
    
    6,202
    
    
    
    34,350
    
    
    
    7,184Plans with accumulated benefit
obligations in excess of plan assets:Accumulated benefit obligations
    
    ¥
    52,913
    
    
    
    4,049
    
    
    
    49,499
    
    
    
    11,409Fair value of plan assets
    
    
    32,869
    
    
    
    187
    
    
    
    33,423
    
    
    
    7,184
 U.S. Dollars(Thousands)2008Japanese
    
    Foreignplans
    
    plansPlans with projected benefit obligations
in excess of plan assets:Projected benefit obligations
    
    $
    551,380
    
    
    
    116,930Fair value of plan assets
    
    
    328,690
    
    
    
    62,020Plans with accumulated benefit
obligations in excess of plan assets:Accumulated benefit obligations
    
    $
    529,130
    
    
    
    40,490Fair value of plan assets
    
    
    328,690
    
    
    
    1,870
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##### Table of Contents



Yen (Millions)2008
    
    2007
    
    2006Japanese
    
    Foreign
    
    Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plans
    
    plans
    
    plansService cost-benefits earned
during the year
    
    ¥
    5,765
    
    
    
    702
    
    
    
    6,052
    
    
    
    729
    
    
    
    5,928
    
    
    
    659Interest cost on projected
benefit obligation
    
    
    3,845
    
    
    
    593
    
    
    
    3,550
    
    
    
    636
    
    
    
    3,478
    
    
    
    572Expected return on plan assets
    
    
    (5,562
    )
    
    
    (521
    )
    
    
    (4,425
    )
    
    
    (453
    )
    
    
    (3,003
    )
    
    
    (383
    )Amortization of transition assets
    
    
    
    
    
    
    
    
    
    
    (1,276
    )
    
    
    
    
    
    
    (1,331
    )
    
    
    Recognized actuarial loss
    
    
    893
    
    
    
    85
    
    
    
    1,408
    
    
    
    137
    
    
    
    3,255
    
    
    
    190Amortization of unrecognized
prior service benefit
    
    
    (2,025
    )
    
    
    9
    
    
    
    (2,041
    )
    
    
    12
    
    
    
    (2,041
    )
    
    
    Curtailment charge
    
    
    
    
    
    
    349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlement loss
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ¥
    2,916
    
    
    
    1,258
    
    
    
    3,268
    
    
    
    1,061
    
    
    
    6,286
    
    
    
    1,038
 U.S. Dollars(Thousands)2008Japanese
    
    Foreignplans
    
    plansService cost-benefits earned during the
year
    
    $
    57,650
    
    
    
    7,020Interest cost on projected benefit
obligation
    
    
    38,450
    
    
    
    5,930Expected return on plan assets
    
    
    (55,620
    )
    
    
    (5,210
    )Amortization of transition assets
    
    
    
    
    
    
    Recognized actuarial loss
    
    
    8,930
    
    
    
    850Amortization of unrecognized prior
service benefit
    
    
    (20,250
    )
    
    
    90Curtailment charge
    
    
    
    
    
    
    3,490Settlement loss
    
    
    
    
    
    
    410$
    29,160
    
    
    
    12,580
  Yen (Millions)
    
    U.S. Dollars (Thousands)Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansCurrent year actuarial (gain) loss
    
    ¥
    6,974
    
    
    
    654
    
    
    $
    69,740
    
    
    
    6,540Amortization of actuarial loss
    
    
    (893
    )
    
    
    (85
    )
    
    
    (8,930
    )
    
    
    (850
    )Amortization of prior service benefit
    
    
    2,025
    
    
    
    (9
    )
    
    
    20,250
    
    
    
    (90
    )Curtailment charge
    
    
    
    
    
    
    (210
    )
    
    
    
    
    
    
    (2,100
    )Settlement loss
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    (410
    )Sale of business
    
    
    
    
    
    
    (51
    )
    
    
    
    
    
    
    (510
    )¥
    8,106
    
    
    
    258
    
    
    $
    81,060
    
    
    
    2,580
 - 131 -




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Yen (Millions)
    
    U.S. Dollars (Thousands)Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansNet actuarial loss
    
    ¥
    1,156
    
    
    
    125
    
    
    $
    11,560
    
    
    
    1,250Prior service benefit
    
    
    (2,025
    )
    
    
    4
    
    
    
    (20,250
    )
    
    
    40
 Assumptions
  2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansDiscount rate
    
    
    2.2
    %
    
    
    5.1
    %
    
    
    2.2
    %
    
    
    4.8
    %Assumed rate of increase
in future compensation
levels
    
    
    3.0
    %
    
    
    3.1
    %
    
    
    3.0
    %
    
    
    2.8
    %
  2008
    
    2007
    
    2006Japanese
    
    Foreign
    
    Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plans
    
    plans
    
    plansDiscount rate
    
    
    2.2
    %
    
    
    4.8
    %
    
    
    2.0
    %
    
    
    5.0
    %
    
    
    2.0
    %
    
    
    5.1
    %Assumed rate of
increase in future
compensation levels
    
    
    3.0
    %
    
    
    2.8
    %
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.0
    %Expected long-term
rate of return on
plan assets
    
    
    3.5
    %
    
    
    6.1
    %
    
    
    3.0
    %
    
    
    6.2
    %
    
    
    2.5
    %
    
    
    6.4
    %
  Plan assets
  2008
    
    2007Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansEquity securities
    
    
    58.2
    %
    
    
    62.1
    %
    
    
    62.6
    %
    
    
    63.6
    %Debt securities
    
    
    25.0
    %
    
    
    29.3
    %
    
    
    24.8
    %
    
    
    17.7
    %Cash
    
    
    2.9
    %
    
    
    4.4
    %
    
    
    2.5
    %
    
    
    3.7
    %Other
    
    
    13.9
    %
    
    
    4.2
    %
    
    
    10.1
    %
    
    
    15.0
    %100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 - 132 -




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##### Table of Contents



Contributions
  Estimated future benefit payments
  Yen
(Millions)
    

U.S.
Dollars (Thousands)Japanese
    
    Foreign
    
    Japanese
    
    Foreignplans
    
    plans
    
    plans
    
    plansYear ending March 31,2009
    
    ¥
    7,046
    
    
    
    454
    
    
    $
    70,460
    
    
    
    4,5402010
    
    
    7,661
    
    
    
    386
    
    
    
    76,610
    
    
    
    3,8602011
    
    
    7,635
    
    
    
    481
    
    
    
    76,350
    
    
    
    4,8102012
    
    
    8,057
    
    
    
    479
    
    
    
    80,570
    
    
    
    4,7902013
    
    
    7,244
    
    
    
    575
    
    
    
    72,440
    
    
    
    5,7502014  2018
    
    
    38,245
    
    
    
    3,422
    
    
    
    382,450
    
    
    
    34,220
 10.
    
    Legal Reserve and Dividends
   - 133 -




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##### Table of Contents



11.
    
    Stock Option Plan
     - 134 -




---



##### Table of Contents



- 135 -




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##### Table of Contents



WeightedWeighted
    
    
    average
    
    
    AggregateNumber
    
    
    average
    
    
    remaining
    
    
    intrinsicof
    
    
    exercise
    
    
    contractual
    
    
    valueshares
    
    
    price
    
    
    term
    
    
    (1)YenYen
    
    
    Years
    
    
    (Millions)2008Outstanding at beginning of year
    
    
    653,000
    
    
    ¥
    7,191Granted
    
    
    113,300
    
    
    
    10,528Exercised
    
    
    121,600
    
    
    
    7,165Forfeited or Expired
    
    
    18,600
    
    
    
    7,538Outstanding at end of year
    
    
    626,100
    
    
    
    7,790
    
    
    
    4.4
    
    
    
    351Exercisable at end of year
    
    
    432,400
    
    
    
    6,533
    
    
    
    4.3
    
    
    
    351Expected to vest after end of year
    
    
    193,700
    
    
    
    10,597
    
    
    
    4.8
    
    
    
    2007Outstanding at beginning of year
    
    
    828,200
    
    
    ¥
    8,244Granted
    
    
    116,900
    
    
    
    7,497Exercised
    
    
    170,400
    
    
    
    6,787Forfeited or Expired
    
    
    121,700
    
    
    
    15,212Outstanding at end of year
    
    
    653,000
    
    
    
    7,191
    
    
    
    4.3
    
    
    
    1,978Exercisable at end of year
    
    
    465,800
    
    
    
    6,618
    
    
    
    4.1
    
    
    
    1,678Expected to vest after end of year
    
    
    187,200
    
    
    
    8,618
    
    
    
    4.8
    
    
    
    3002006Outstanding at beginning of year
    
    
    868,600
    
    
    ¥
    8,293Granted
    
    
    115,200
    
    
    
    6,397Exercised
    
    
    139,700
    
    
    
    6,308Forfeited or Expired
    
    
    15,900
    
    
    
    14,563Outstanding at end of year
    
    
    828,200
    
    
    
    8,244Exercisable at end of year
    
    
    504,300
    
    
    
    8,308
 (1)
 - 136 -




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##### Table of Contents



WeightedWeighted
    
    
    averageNumber
    
    
    average
    
    
    remaining
    
    
    Aggregateof
    
    
    exercise
    
    
    contractual
    
    
    intrinsicshares
    
    
    price
    
    
    term
    
    
    valueU.S. DollarsU.S. Dollars
    
    
    Years
    
    
    (Thousands)2008Outstanding at beginning of year
    
    
    653,000
    
    
    $
    71.91Granted
    
    
    113,300
    
    
    
    105.28Exercised
    
    
    121,600
    
    
    
    71.65Forfeited or Expired
    
    
    18,600
    
    
    
    75.38Outstanding at end of year
    
    
    626,100
    
    
    
    77.90
    
    
    
    4.4
    
    
    
    3,510Exercisable at end of year
    
    
    432,400
    
    
    
    65.33
    
    
    
    4.3
    
    
    
    3,510Expected to vest after end of year
    
    
    193,700
    
    
    
    105.97
    
    
    
    4.8
    
    
    
    
  Options OutstandingWeightedaverageNumber
    
    remainingoutstanding at

    
    contractual

    
    Weighted averageRange of exercise prices
    
    March 31, 2008
    
    term

    
    exercise priceYen
    
    
    
    
    
    (years)

    
    Yen

    
    U.S. Dollars1
    
    
    59,600
    
    
    
    18.1
    
    
    
    1
    
    
    
    0.015,909
    
    
    38,100
    
    
    
    0.3
    
    
    
    5,909
    
    
    
    59.096,954
    
    
    105,600
    
    
    
    1.3
    
    
    
    6,954
    
    
    
    69.548,134
    
    
    87,100
    
    
    
    3.3
    
    
    
    8,134
    
    
    
    81.348,147
    
    
    142,000
    
    
    
    2.3
    
    
    
    8,147
    
    
    
    81.479,072
    
    
    96,100
    
    
    
    4.3
    
    
    
    9,072
    
    
    
    90.7212,098
    
    
    97,600
    
    
    
    5.3
    
    
    
    12,098
    
    
    
    120.981 to 12,098
    
    
    626,100
    
    
    
    4.4
    
    
    
    7,790
    
    
    
    77.90
 
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##### Table of Contents



The Stock Acquisition Rights  the exercise price is equal to or greater than the market price of
the stock on the grant date
 2008(1)
    
    
    2007
    
    
    2006Grant-date fair value
    
    ¥
    2,011
    
    
    ¥
    1,976
    
    
    ¥
    2,325($20.11
    )Expected life
    
    
    4.0 years
    
    
    4.0 years
    
    
    4.0 yearsRisk-free interest rate
    
    
    1.33
    %
    
    
    1.23
    %
    
    
    0.54
    %Expected volatility
    
    
    26.09
    %
    
    
    32.76
    %
    
    
    38.93
    %Expected dividend yield
    
    
    0.97
    %
    
    
    1.00
    %
    
    
    0.96
    %
  The Stock Acquisition Rights  the exercise price is less than the market price of the stock on
the grant date
 2008
    
    
    2007
    
    
    2006Grant-date fair value
    
    ¥
    11,014
    
    
    ¥
    8,139
    
    
    ¥
    7,235($110.14
    )Expected life
    
    
    5.5 years
    
    
    5.5 years
    
    
    5.5 yearsRisk-free interest rate
    
    
    1.59
    %
    
    
    1.47
    %
    
    
    0.47
    %Expected volatility
    
    
    31.25
    %
    
    
    38.84
    %
    
    
    44.46
    %Expected dividend yield
    
    
    0.95
    %
    
    
    0.96
    %
    
    
    0.80
    %
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12. Other Comprehensive Income (Loss)
  Yen
    
    
    
    
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008Foreign currency translation adjustments:Balance at beginning of period
    
    ¥
    (16,688
    )
    
    
    (21,071
    )
    
    
    (47,171
    )
    
    $
    (166,880
    )Adjustments for period
    
    
    (55,757
    )
    
    
    4,383
    
    
    
    26,100
    
    
    
    (557,570
    )Balance at end of period
    
    
    (72,445
    )
    
    
    (16,688
    )
    
    
    (21,071
    )
    
    
    (724,450
    )Net unrealized gains (losses) on
securities:Balance at beginning of period
    
    
    1,769
    
    
    
    1,693
    
    
    
    801
    
    
    
    17,690Adjustments for period
    
    
    (3,296
    )
    
    
    76
    
    
    
    892
    
    
    
    (32,960
    )Balance at end of period
    
    
    (1,527
    )
    
    
    1,769
    
    
    
    1,693
    
    
    
    (15,270
    )Minimum pension liability adjustments:Balance at beginning of period
    
    
    
    
    
    
    (2,568
    )
    
    
    (5,287
    )
    
    
    Adjustments for period
    
    
    
    
    
    
    2,290
    
    
    
    2,719
    
    
    
    Adjustment
for application of SFAS158
    
    
    
    
    
    
    278
    
    
    
    
    
    
    
    Balance at end of period
    
    
    
    
    
    
    
    
    
    
    (2,568
    )
    
    
    Pension liability adjustments:Balance at beginning of period
    
    
    (2,927
    )
    
    
    
    
    
    
    
    
    
    
    (29,270
    )Adjustments for period
    
    
    (4,684
    )
    
    
    
    
    
    
    
    
    
    
    (46,840
    )Adjustment for application of
SFAS158
    
    
    
    
    
    
    (2,927
    )
    
    
    
    
    
    
    Balance at end of period
    
    
    (7,611
    )
    
    
    (2,927
    )
    
    
    
    
    
    
    (76,110
    )Total accumulated other comprehensive income
(loss):Balance at beginning of period
    
    
    (17,846
    )
    
    
    (21,946
    )
    
    
    (51,657
    )
    
    
    (178,460
    )Adjustments for period
    
    
    (63,737
    )
    
    
    6,749
    
    
    
    29,711
    
    
    
    (637,370
    )Adjustment for application of
SFAS158
    
    
    
    
    
    
    (2,649
    )
    
    
    
    
    
    
    Balance at end of period
    
    ¥
    (81,583
    )
    
    
    (17,846
    )
    
    
    (21,946
    )
    
    $
    (815,830
    )
 - 139 -




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Yen(Millions)TaxBefore tax
    
    (expense)
    
    Net-of-taxamount
    
    or benefit
    
    amount2008Foreign currency translation adjustments:Amount arising during the year on
investments in foreign entities held
at end of period
    
    ¥
    (56,565
    )
    
    
    (103
    )
    
    
    (56,668
    )Reclassification adjustments for the
portion of gains and losses realized
upon sale and liquidation of
investments in foreign entities
    
    
    911
    
    
    
    
    
    
    
    911Net foreign
currency translation adjustments
    
    
    (55,654
    )
    
    
    (103
    )
    
    
    (55,757
    )Unrealized gains (losses) on securities:Unrealized holding gains (losses)
arising for period
    
    
    (6,343
    )
    
    
    2,145
    
    
    
    (4,198
    )Reclassification adjustments for
(gains) losses realized in net
income
    
    
    1,513
    
    
    
    (611
    )
    
    
    902Net unrealized gains (losses)
    
    
    (4,830
    )
    
    
    1,534
    
    
    
    (3,296
    )Pension liability adjustments
    
    
    (8,080
    )
    
    
    3,396
    
    
    
    (4,684
    )Other comprehensive income (loss)
    
    ¥
    (68,564
    )
    
    
    4,827
    
    
    
    (63,737
    )2007Foreign currency translation adjustments:Amount arising during the year on
investments in foreign entities held at
end of period
    
    ¥
    4,298
    
    
    
    (4)
    
    
    
    4,294Reclassification adjustments for the
portion of gains and losses realized upon
sale and liquidation of investments in
foreign entities
    
    
    89
    
    
    
    
    
    
    
    89Net foreign currency translation
adjustments
    
    
    4,387
    
    
    
    (4
    )
    
    
    4,383Unrealized gains (losses) on securities:Unrealized holding gains arising for period
    
    
    171
    
    
    
    (91
    )
    
    
    80Reclassification adjustments for (gains)
losses realized in net income
    
    
    (7
    )
    
    
    3
    
    
    
    (4
    )Net unrealized gains (losses)
    
    
    164
    
    
    
    (88
    )
    
    
    76Minimum pension liability adjustments
    
    
    3,327
    
    
    
    (1,037
    )
    
    
    2,290Other comprehensive income (loss)
    
    ¥
    7,878
    
    
    
    (1,129
    )
    
    
    6,7492006Foreign currency translation adjustments
    
    ¥
    26,108
    
    
    
    (8)
    
    
    
    26,100Unrealized gains (losses) on securities:Unrealized holding gains arising for period
    
    2,128
    
    
    (856
    )
    
    
    1,272Reclassification adjustments for (gains)
losses realized in net income
    
    
    (387
    )
    
    
    7
    
    
    
    (380
    )Net unrealized gains (losses)
    
    
    1,741
    
    
    
    (849
    )
    
    
    892Minimum pension liability adjustments
    
    
    4,793
    
    
    
    (2,074
    )
    
    
    2,719Other comprehensive income (loss)
    
    ¥
    32,642
    
    
    
    (2,931
    )
    
    
    29,711
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U.S. Dollars(Thousands)TaxBefore tax
    
    (expense)
    
    Net-of-taxamount
    
    or benefit
    
    amount2008Foreign currency translation adjustments:Amount arising during the year on investments
in foreign entities held at end of period
    
    $
    (565,650
    )
    
    
    (1,030
    )
    
    
    (566,680
    )Reclassification adjustments for the
portion of gains and losses realized upon
sale and liquidation of investments in
foreign entities
    
    
    9,110
    
    
    
    
    
    
    
    9,110Net foreign currency translation adjustments
    
    
    (556,540
    )
    
    
    (1,030
    )
    
    
    (557,570
    )Unrealized gains (losses) on securities:Unrealized holding gains (losses) arising
for period
    
    
    (63,430
    )
    
    
    21,450
    
    
    
    (41,980
    )Reclassification adjustments for (gains)
losses realized in net income
    
    
    15,130
    
    
    
    (6,110
    )
    
    
    9,020Net unrealized gains (losses)
    
    
    (48,300
    )
    
    
    15,340
    
    
    
    (32,960
    )Pension liability adjustments
    
    
    (80,800
    )
    
    
    33,960
    
    
    
    (46,840
    )Other
comprehensive income (loss)
    
    $
    (685,640
    )
    
    
    48,270
    
    
    
    (637,370
    )
 13. Leases
   Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)Year ending March 31,2009
    
    ¥
    4,965
    
    
    $
    49,6502010
    
    
    3,619
    
    
    
    36,1902011
    
    
    2,537
    
    
    
    25,3702012
    
    
    1,703
    
    
    
    17,0302013
    
    
    1,476
    
    
    
    14,760Later years
    
    
    4,701
    
    
    
    47,010¥
    19,001
    
    
    $
    190,010
 14. Commitments and Contingent Liabilities
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15.
    
    Risk Management Activities and Derivative Financial Instruments
    16.
    
    Fair Value of Financial Instruments
  (a)
    
    Cash and cash equivalents, Short-term investments, Trade receivables, Other current assets,
Short-term debt, Trade payables, Accrued salaries and wages, Accrued expenses, Income taxes
payables and Other current liabilities.
  (b)
    
    Marketable securities and Investments in securities
  - 142 -




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(c)
    
    Long-term debt
  (d)
    
    Forward Foreign Exchange Contracts and Foreign Currency Option Contracts
   Yen (Millions)As of March 31, 2008
    
    Carrying amount
    
    Estimated fair valueNonderivatives:Assets:Marketable securities for which it is:Practicable to estimate fair value
    
    ¥
    3,986
    
    
    
    3,986Investments in securities and other
assets for which it is:Practicable to estimate fair value
    
    
    28,863
    
    
    
    28,863Not practicable to estimate fair value
    
    
    598
    
    
    
    Liability:Long-term debt, including current portion
    
    
    (446
    )
    
    
    (446
    )Derivatives:Forward foreign exchange contracts in a:Gain position
    
    
    
    
    
    
    Loss position
    
    
    (50
    )
    
    
    (50
    )Currency option contracts in a:Gain position
    
    
    18
    
    
    
    18Loss position
    
    
    
    
    
    
    
 Yen (Millions)As of March 31, 2007
    
    Carrying amount
    
    Estimated fair valueNonderivatives:Assets:Marketable securities for which it is:Practicable to estimate fair value
    
    ¥
    1,063
    
    
    
    1,063Investments in securities and other assets
for which it is:Practicable to estimate fair value
    
    
    23,608
    
    
    
    23,608Not practicable to estimate fair value
    
    
    563
    
    
    
    Liability:Long-term debt, including current portion
    
    
    (1,046
    )
    
    
    (1,046
    )Derivatives:Forward foreign exchange contracts in a:Gain position
    
    
    78
    
    
    
    78Loss position
    
    
    (6
    )
    
    
    (6
    )Currency option contracts in a:Gain position
    
    
    82
    
    
    
    82Loss position
    
    
    
    
    
    
    
 - 143 -




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U.S. Dollars (Thousands)As of March 31, 2008
    
    Carrying amount
    
    Estimated fair valueNonderivatives:Assets:Marketable securities for which it is:Practicable to estimate fair value
    
    $
    39,860
    
    
    
    39,860Investments in securities and other
assets for which it is:Practicable to estimate fair value
    
    
    288,630
    
    
    
    288,630Not practicable to estimate fair value
    
    
    5,980
    
    
    
    Liability:Long-term debt, including current portion
    
    
    (4,460
    )
    
    
    (4,460
    )Derivatives:Forward foreign exchange contracts in a:Gain position
    
    
    
    
    
    
    Loss position
    
    
    (500
    )
    
    
    (500
    )Currency option contracts in a:Gain position
    
    
    180
    
    
    
    180Loss position
    
    
    
    
    
    
    
  Limitations
  17.
    
    Restructuring Cost
    - 144 -




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Yen (Millions)Impairment
    
    Gain onWorkforce
    
    on property,
    
    sales ofreduction
    
    plant and
    
    assets held
    
    Otherobligations
    
    equipment
    
    for sale
    
    liabilities
    
    TotalMarch 31, 2006
    
    ¥
    3,023
    
    
    
    
    
    
    
    
    
    
    
    680
    
    
    
    3,703Costs and expenses
    
    
    441
    
    
    
    190
    
    
    
    
    
    
    
    412
    
    
    
    1,043Income
    
    
    
    
    
    
    
    
    
    
    (533
    )
    
    
    
    
    
    
    (533
    )Payments
    
    
    3,432
    
    
    
    
    
    
    
    
    
    
    
    1,032
    
    
    
    4,464Non-cash adjustments
    
    
    
    
    
    
    190
    
    
    
    (533
    )
    
    
    
    
    
    
    (343
    )March 31, 2007
    
    ¥
    32
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    92Costs and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payments
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    92Non-cash adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31, 2008
    
    ¥
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.S. Dollars (Thousands)March 31, 2007
    
    $
    320
    
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    920Costs and expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Payments
    
    
    320
    
    
    
    
    
    
    
    
    
    
    
    600
    
    
    
    920Non-cash adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March 31, 2008
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   18.
    
    Assets Held for Sale
   - 145 -




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Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Assets held for saleNet property, plant and equipment
    
    ¥
    919
    
    
    
    2,125
    
    
    $
    9,190
 19.
    
    Goodwill and Other Intangible Assets
  Yen (Millions)2008Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net AmountAmortized intangible assets:Patent
    
    ¥
    34,425
    
    
    
    5,893
    
    
    
    28,532Customer relationships
    
    
    12,315
    
    
    
    2,145
    
    
    
    10,170Software
    
    
    8,571
    
    
    
    4,936
    
    
    
    3,635Unpatented technologies
    
    
    16,936
    
    
    
    2,012
    
    
    
    14,924Other
    
    
    2,970
    
    
    
    1,201
    
    
    
    1,769Total
    
    
    75,217
    
    
    
    16,187
    
    
    
    59,030Unamortized intangible assets
    
    ¥
    4,292
    
    
    
    
    
    
    
    4,292
 Yen (Millions)2007Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net AmountAmortized intangible assets:Patent
    
    ¥
    13,388
    
    
    
    3,888
    
    
    
    9,500Customer relationships
    
    
    11,001
    
    
    
    1,333
    
    
    
    9,668Software
    
    
    9,660
    
    
    
    5,890
    
    
    
    3,770Unpatented technologies
    
    
    4,163
    
    
    
    954
    
    
    
    3,209Other
    
    
    2,721
    
    
    
    870
    
    
    
    1,851Total
    
    
    40,933
    
    
    
    12,935
    
    
    
    27,998Unamortized intangible assets
    
    ¥
    3,007
    
    
    
    
    
    
    
    3,007
 U.S. Dollars (Thousands)2008Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net AmountAmortized intangible assets:Patent
    
    $
    344,250
    
    
    
    58,930
    
    
    
    285,320Customer relationships
    
    
    123,150
    
    
    
    21,450
    
    
    
    101,700Software
    
    
    85,710
    
    
    
    49,360
    
    
    
    36,350Unpatented technologies
    
    
    169,360
    
    
    
    20,120
    
    
    
    149,240Other
    
    
    29,700
    
    
    
    12,010
    
    
    
    17,690Total
    
    
    752,170
    
    
    
    161,870
    
    
    
    590,300Unamortized intangible assets
    
    $
    42,920
    
    
    
    
    
    
    
    42,920
 - 146 -




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##### Table of Contents



Yen (Millions)Electronicmaterials and
    
    Recordingcomponents
    
    media
    
    TotalMarch 31, 2006
    
    ¥
    19,453
    
    
    
    
    
    
    
    19,453Additions
    
    
    8
    
    
    
    
    
    
    
    8Deductions
    
    
    (1,978
    )
    
    
    
    
    
    
    (1,978
    )Translation adjustment
    
    
    56
    
    
    
    
    
    
    
    56March 31, 2007
    
    
    17,539
    
    
    
    
    
    
    
    17,539Additions
    
    
    15,144
    
    
    
    
    
    
    
    15,144Deductions
    
    
    (609
    )
    
    
    
    
    
    
    (609
    )Translation adjustment
    
    
    (2,054
    )
    
    
    
    
    
    
    (2,054
    )March 31, 2008
    
    ¥
    30,020
    
    
    
    
    
    
    
    30,020
 U.S. Dollars (Thousands)Electronicmaterials and
    
    Recordingcomponents
    
    media
    
    TotalMarch 31, 2007
    
    $
    175,390
    
    
    
    
    
    
    
    175,390Additions
    
    
    151,440
    
    
    
    
    
    
    
    151,440Deductions
    
    
    (6,090
    )
    
    
    
    
    
    
    (6,090
    )Translation adjustment
    
    
    (20,540
    )
    
    
    
    
    
    
    (20,540
    )March 31, 2008
    
    $
    300,200
    
    
    
    
    
    
    
    300,200
   - 147 -




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##### Table of Contents



20.
    
    Net Income per Share
  Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008Income from continuing
operations available to
common stockholders
    
    ¥
    71,461
    
    
    
    70,125
    
    
    
    44,411
    
    
    $
    714,610Loss from discontinued
operations available to
common stockholders
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    Net income available to
common stockholders
    
    ¥
    71,461
    
    
    
    70,125
    
    
    
    44,101
    
    
    $
    714,610
 Number of shares (Thousands)2008
    
    2007
    
    2006Weighted average common shares
outstanding  Basic
    
    
    129,525
    
    
    
    132,342
    
    
    
    132,239Effect of dilutive stock options
    
    
    124
    
    
    
    146
    
    
    
    116Weighted average common shares
outstanding  Diluted
    
    
    129,649
    
    
    
    132,488
    
    
    
    132,355
 Yen
    
    U.S. Dollars2008
    
    2007
    
    2006
    
    2008Income from
continuing
operations per
share:Basic
    
    ¥
    551.72
    
    
    
    529.88
    
    
    
    335.84
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    335.54
    
    
    
    5.51Loss from
discontinued
operations per
share:Basic
    
    
    
    
    
    
    
    
    
    
    (2.34
    )
    
    
    Diluted
    
    
    
    
    
    
    
    
    
    
    (2.34
    )
    
    
    Net income per share:Basic
    
    ¥
    551.72
    
    
    
    529.88
    
    
    
    333.50
    
    
    $
    5.52Diluted
    
    
    551.19
    
    
    
    529.29
    
    
    
    333.20
    
    
    
    5.51
  21.
    
    Business and Credit Concentrations
  - 148 -




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##### Table of Contents



22.
    
    Discontinued Operations
   Yen (Millions)2006Net sales
    
    ¥
    45Loss from operations before income taxes (including loss on
disposal of ¥224 million in 2006)
    
    
    310Income tax expense
    
    
    Loss from discontinued operations
    
    ¥
    310
 - 149 -




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##### Table of Contents



23.
    
    Acquisition
 (1)
    
    Magnecomp Precision Technology Public Company Limited
         - 150 -




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##### Table of Contents



(2)
    
    Lambda Power Business
   Yen(Millions)Current assets
    
    ¥
    23,176Property, plant and equipment
    
    
    9,673Intangible assets
    
    
    13,686Goodwill
    
    
    4,854Other assets
    
    
    5,090Total assets acquired
    
    
    56,479Current liabilities
    
    
    (13,429
    )Noncurrent liabilities
    
    
    (9,583
    )Minority interests
    
    
    (9,265
    )Total liabilities assumed
    
    
    (32,277
    )Net assets acquired
    
    ¥
    24,202
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Yen(Millions)2006Net sales
    
    ¥
    816,431Income from continuing operations
    
    
    44,188Loss from discontinued operations
    
    
    310Net income
    
    
    43,878
 Yen2006Income from continuing operations
per share:Basic
    
    ¥
    334.15Diluted
    
    
    333.86Loss from discontinued operations
per share:Basic
    
    ¥
    (2.34
    )Diluted
    
    
    (2.34
    )Net income per share:Basic
    
    ¥
    331.81Diluted
    
    
    331.52
      - 152 -




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##### Table of Contents



(3)
    
    Amperex Technology Limited
  24.
    
    Sale of Business to Imation Corp.
     - 153 -




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##### Table of Contents



25.
    
    Acquisition of HDD Head Related Assets
     26.
    
    Related Party Transaction
  Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2008Due from
    
    ¥
    6,212
    
    
    
    4,134
    
    
    $
    62,120Due to
    
    
    3,654
    
    
    
    4,211
    
    
    
    36,540
  Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008Gross purchase
    
    ¥
    42,707
    
    
    
    54,082
    
    
    
    56,022
    
    
    $
    427,070Less raw materials
sold with no
mark-up
    
    
    (32,569
    )
    
    
    (43,327
    )
    
    
    (46,580
    )
    
    
    (325,690
    )Net purchases
    
    
    10,138
    
    
    
    10,755
    
    
    
    9,442
    
    
    
    101,380Research and
development
expenses
    
    
    1,626
    
    
    
    1,642
    
    
    
    2,141
    
    
    
    16,260Sales
    
    
    8,645
    
    
    
    217
    
    
    
    249
    
    
    
    86,450
 - 154 -




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##### Table of Contents



27.
    
    Supplementary Information
 Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)2008
    
    2007
    
    2006
    
    2008(a) Statement of IncomeResearch and development
    
    
    ¥57,387
    
    
    
    50,058
    
    
    
    45,528
    
    
    $
    573,870Rent
    
    
    8,991
    
    
    
    8,794
    
    
    
    7,739
    
    
    
    89,910Maintenance and repairs
    
    
    14,820
    
    
    
    13,494
    
    
    
    13,732
    
    
    
    148,200Advertising costs
    
    
    3,639
    
    
    
    4,570
    
    
    
    4,828
    
    
    
    36,390(b) Statement of Cash FlowsCash paid during year for:Interest
    
    
    ¥227
    
    
    
    239
    
    
    
    749
    
    
    
    $2,270Income taxes
    
    
    ¥26,613
    
    
    
    15,364
    
    
    
    32,789
    
    
    $
    266,130
 Noncash activities
   Yen
    
    U.S. Dollars(Millions)
    
    (Thousands)Short-term debt assumed in connection with
business acquisition
    
    ¥
    2,480
    
    
    $
    24,800Long-term debt assumed in connection with
business acquisition
    
    
    8,769
    
    
    
    87,690
   Yen(Millions)Short-term debt assumed in connection with business acquisition
    
    
    ¥781Long-term debt assumed in connection with business acquisition
    
    
    2,107
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Schedule II
 
 Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atbeginning
    
    
    Charged to
    
    
    Acquisition
    
    
    Bad debts
    
    
    Translation
    
    
    end ofof period
    
    
    earnings
    
    
    (Sale)
    
    
    written off
    
    
    adjustment
    
    
    periodYear ended
March 31, 2008:Allowance for
doubtful receivables
    
    ¥
    6,311
    
    
    
    259
    
    
    
    (893
    )
    
    
    1,104
    
    
    
    (591
    )
    
    
    3,982Year ended
March 31, 2007:Allowance for
doubtful receivables
    
    ¥
    4,064
    
    
    
    2,405
    
    
    
    
    
    
    
    234
    
    
    
    76
    
    
    
    6,311Year ended
March 31, 2006:Allowance for
doubtful receivables
    
    ¥
    2,560
    
    
    
    322
    
    
    
    1,033
    
    
    
    71
    
    
    
    220
    
    
    
    4,064
 - 156 -




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##### Table of Contents



Item 18.
    
    Financial Statements
  
 Item 19.
    
    Exhibits
 ExhibitNumber
    
    Description1.1
    
    ARTICLES OF INCORPORATION (English translation)1.2
    
    REGULATIONS OF THE BOARD OF DIRECTORS (English translation)1.3
    
    REGULATIONS OF THE BOARD OF COMPANY AUDITORS (English
translation)2.1
    
    SHARE HANDLING REGULATIONS (English translation)8.1
    
    List of Significant Subsidiaries11.1
    
    TDK CODE OF ETHICS (English translation)12.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of CEO of the Company12.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of CFO of the Company13.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of CEO of the Company (certificate is not
deemed filed for purpose of Section 18 of the Securities
Exchange Act of 1934 and is not deemed to be incorporated
by reference into any filing under the Securities Act of
1933 or the Securities Exchange Act 0f 1934).13.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of CFO of the Company (certificate is not
deemed filed for purpose of Section 18 of the Securities
Exchange Act of 1934 and is not deemed to be incorporated
by reference into any filing under the Securities Act of
1933 or the Securities Exchange Act 0f 1934).
 - 157 -




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##### Table of Contents



SIGNATURES
  TDK Corporation
(Registrant)Date:  July 28, 2008
    By:
    /s/Hajime SawabeName:
    Hajime SawabeTitle:
    Representative Director, Chairperson and CEO - 158 -