consolidated financial statements tamura … file5 tamura corporation and consolidated subsidiaries...

CONSOLIDATED FINANCIAL STATEMENTS TAMURA CORPORATION

AS OF MARCH 31, 2010 AND 2009

3

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Cash and bank deposits (Notes 3 and 4) ¥ 22,230 ¥ 18,036 $ 239,032Notes and accounts receivable-trade (Note 4) Non-consolidated subsidiaries and affiliates 550 5,913 Other 17,355 186,612 Allowance for doubtful accounts (248) (2,666)

17,657 189,859Inventories (Note 6) 8,426 90,602Deferred tax assets (Note 13) 530 5,699Other current assets 2,212 23,786 Total current assets 51,055 548,978

Securities in the non-current portfolio (Notes 4 and 5) 1,721 18,505Investments in non-consolidated subsidiaries and affiliates 336 3,613Deferred tax assets (Note 13) 494 5,312Other assets 2,160 23,226 Total investments and other assets 4,711 50,656

Land 6,289 67,623Buildings and structures 15,000 15,962 161,290Machinery and equipment 21,423 230,355Lease assets 1,442 1,070 15,505Construction in progress 11 119

44,165 474,892Accumulated depreciation Net property, plant and equipment 17,119 184,075 Total assets ¥ 72,885 ¥ 75,099 $ 783,709

March 31,2009 2010

Thousands of

(Note 1(a))U.S. dollars

6,010

(27,046)

2010

Millions of yen

6,436

22,774

(27,613)

50,349

March 31,

ASSETS

3,217

(401)

89710,87017,329

17,243

The accompanying notes are an integral part of these statements.

5901,350

Investments and Other Assets:

2,717

46,353

1,353

Current Assets:

487

Property, Plant and Equipment:

18,740

111

(290,817)

4

Short-term loans (Notes 4 and 7) ¥ 2,686 ¥ 3,708 $ 28,881Current portion of long-term debt (Notes 4 and7) 4,302 46,258

Lease obligations (Notes 4 and 7) 321 212 3,451Notes and accounts payable-trade (Note 4) Non-consolidated subsidiaries and affiliates 439 4,720 Other 10,249 110,205

10,688 114,925Income tax payable 287 3,086Accrued bonuses 835 838 8,979Accrued bonuses for directors 29 29 312Other current liabilities (Note 13) 3,285 35,323 Total current liabilities 22,433 241,215

16,721 179,796

1,200 1,148 12,903

2,122 22,817

8 86

651 7,000

(Notes 14 and 16)

Common stock: 11,829 11,829 127,194 Authorized - 252,000,000 shares Issued and outstanding – 75,067,736 sharesAdditional paid-in capital 15,337 15,337 164,914Retained earnings 4,163 6,495 44,763Treasury stock, at cost (Note 10) (2,364) (2,361) (25,419) Total shareholders' equity 28,965 31,300 311,452

Unrealized loss on securities (125) (303) (1,344)Deferred loss on hedges (89) (106) (957)Translation adjustments (2,204) (2,403) (23,699) Total revaluation and translation adjustments (2,418) (2,812) (26,000)

70 46 7523,133 3,630 33,688

Total net assets 29,750 32,164 319,892 Total liabilities and net assets ¥ 72,885 ¥ 75,099 $ 783,709

Thousands ofU.S. dollars

2009 20102010

Millions of yenMarch 31,

(Note 1(a))March 31,

Current Liabilities:

LIABILITIES AND SHAREHOLDERS' EQUITY

4,00121,097

434

Reserve for Retirement Benefits (Note 8)

Long-term Debt (Notes 4 and 7) 17,460

Lease obligations (Notes 4 and 7)


Other Long-term Liabilities

Minority Interests

Net AssetsShareholders' Equity (Note 9)

800

2,428

Deferred Tax Liabilities (Note 13)

Commitments and Contingent Liabilities

2

Subscription Rights to Shares

253

11,38611,622

236

Revaluation and Translation Adjustments

5


CONSOLIDATED STATEMENTS OF OPERATIONS

¥ 63,581 ¥ 77,507 $ 683,666

Cost of sales (Note 12) 47,936 515,441Selling, general and administrative expenses (Notes 11 and 12) 15,416 165,763

63,352 681,204 Operating income (loss) 229 2,462

Interest and dividend income 59 634Interest expense (485) (5,215)Foreign exchange loss (81) (870)Loss on impairment of fixed assets (Note 18) (323) (586) (3,473)Special retirement expenses (140) (388) (1,505)Provision of allowance for doubtful accounts (307) － (3,301)Loss on valuation of inventories － (821) －Loss on sales of stocks of subsidiaries and affiliates － (854) －Other income 552 357 5,935Other expenses (520) (5,591)

(1,245) (13,386) Loss before income taxes and minority interests (1,016) (10,924)

Current 482 5,182Prior years' adjustment － 459 －Deferred 1,191 12,807

(357) (3,838) Net loss ¥ (2,332) ¥ (7,506) $ (25,075)

Basic net loss ¥ (33.56) ¥ (105.67) $ (0.36)Cash dividends per share 3.00 0.03

170

20102009

(1,309)78,81618,186

Millions of yen

Net Sales

Operating Cost and Expenses:

2010

Income Taxes (Note 13)

Other Income (Expenses):

Minority Interests

302

829


3.00

Per Share:

(428)

Thousands ofU.S. dollars(Note 1(a))

March 31, March 31,

60,630

(805)

U.S. dollars

(6,034)(4,725)

Yen

(118)

(1,370)

6


CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

Balance at March 31, 2009 ¥ (303) ¥ (106) ¥ (2,403) ¥ (2,812) ¥ 46 ¥ 3,630 ¥ 32,164Effect of changes in accounting policies applied to foreign subsidiaries －Dividends from surplus －Net loss (2,332)Acquisition of treasury stock (5)Sale of treasury stock 2Other －－－－Items other than changes in shareholders’ equity 178 17 199 394 24 (497) (79)

Balance at March 31, 2010 ¥ (125) ¥ (89) ¥ (2,204) ¥ (2,418) ¥ 70 ¥ 3,133 ¥ 29,750

adjust-

Millions of yenRevaluation and translation adjustments

Total

rights to adjustments shares

Translation

securities

Deferredloss on loss on

UnrealizedMinority Total net

assetshedges ments interests

revaluation and Subscription translation

Number ofsharesissued

Balance at March 31, 2009 75,067,736 ¥ 11,829 ¥ 15,337 ¥ 6,495 ¥ (2,361) ¥ 31,300Effect of changes in accounting policies applied to foreign subsidiaries －－Dividends from surplus －－Net loss (2,332) (2,332)Acquisition of treasury stock (5) (5)Sale of treasury stock 0 2 2Other －－Items other than changes in shareholders’ equity

Balance at March 31, 2010 75,067,736 ¥ 11,829 ¥ 15,337 ¥ 4,163 ¥ (2,364) ¥ 28,965

Millions of yenShareholders’ equity

Retained stock equity

Additionalpaid-inCommon

Treasuryshareholders'

(Note 8)

Total

stock capital earnings

7

Balance at March 31, 2008 ¥ 412 ¥ (159) ¥ (541) ¥ (288) ¥ 31 ¥ 209 ¥ 41,539Effect of changes in accounting policies applied to foreign subsidiaries (36)Dividends from surplus (432)Net loss (7,506)Acquisition of treasury stock (2,160)Sale of treasury stock 2Other (41) (41) 3,785 3,589Items other than changes in shareholders’ equity (715) 53 (1,821) (2,483) 15 (364) (2,832)

Balance at March 31, 2009 ¥ (303) ¥ (106) ¥ (2,403) ¥ (2,812) ¥ 46 ¥ 3,630 ¥ 32,164

revaluation and

translation adjustments

Translationadjust-

Millions of yen

rights toshares

Revaluation and translation adjustments

Unrealizedgain (loss) on

securities

TotalDeferredloss on

mentshedgesMinorityinterests

Total netassets

Subscription


Balance at March 31, 2008 75,067,736 ¥ 11,829 ¥ 15,337 ¥ 14,624 ¥ (203) ¥ 41,587Effect of changes in accounting policies applied to foreign subsidiaries (36) (36)Dividends from surplus (432) (432)Net loss (7,506) (7,506)Acquisition of treasury stock (2,160) (2,160)Sale of treasury stock (0) 2 2Other (155) (155)Items other than changes in shareholders’ equity

Balance at March 31, 2009 75,067,736 ¥ 11,829 ¥ 15,337 ¥ 6,495 ¥ (2,361) ¥ 31,300

capital equityearningsRetained

stock

Treasurystock

Millions of yenShareholders’ equity

(Note 8)

Additionalpaid-in

Totalshareholders'Common

8


Balance at March 31, 2009 $ (3,258) $ (1,140) $ (25,839) $ (30,237) $ 494 $ 39,032 $ 345,848Effect of changes in accounting policies applied to foreign subsidiaries －Dividends from surplus －Net loss (25,075)Acquisition of treasury stock (53)Sale of treasury stock 21Other －－－－Items other than changes in shareholders’ equity 1,914 183 2,140 4,237 258 (5,344) (849)

Balance at March 31, 2010 $ (1,344) $ (957) $ (23,699) $ (26,000) $ 752 $ 33,688 $ 319,892

Revaluation and translation adjustmentsTotal

Thousands of U.S. dollars (Note 1(a))

Deferred Subscription translation rights to adjustments shares

Unrealized Translation revaluation and

mentsloss on loss on

interests adjust- Minority Total net

assetssecurities hedges


Balance at March 31, 2009 75,067,736 $ 127,194 $ 164,914 $ 69,838 $ (25,387) $ 336,559Effect of changes in accounting policies applied to foreign subsidiaries －－Dividends from surplus －－Net loss (25,075) (25,075)Acquisition of treasury stock (53) (53)Sale of treasury stock 0 21 21Other －－Items other than changes in shareholders’ equity

Balance at March 31, 2010 75,067,736 $ 127,194 $ 164,914 $ 44,763 $ (25,419) $ 311,452

Thousands of U.S. dollars (Note 1(a))Shareholders’ equity

Additionalpaid-in

Treasury TotalCommon Retained stock shareholders'

stock capital earnings (Note 8) equity

9

Loss before income taxes ¥ (1,016) ¥ (6,034) $ (10,924)Depreciation 2,393 2,890 25,731Loss on impairment of fixed assets 323 586 3,473Decrease in reserve for retirement benefits (339) (54) (3,645)Decrease in prepaid pension cost 158 15 1,698Increase in allowance for doubtful accounts 156 42 1,677(Gain) loss on sales of investment securities (2) 908 (21)Write-down of investment securities 62 123 666Interest and dividend income (59) (170) (634)Interest expense 485 428 5,215Foreign exchange loss 13 303 139Decrease in accrued bonuses (3) (327) (32)Increase (decrease) in accrued bonuses for directors 0 (73) 0(Increase) decrease in trade receivable (30) 7,836 (322)Decrease in inventories 2,602 1,114 27,978Decrease in trade payable (1,189) (3,850) (12,784)Other, net (36) (161) (387)

3,518 3,576 37,828Interest and dividend received 86 924Interest paid (473) (5,086)Income taxes paid (648) (6,968)Net cash provided by operating activities 2,483 26,698

Purchase of tangible fixed assets (1,221) (13,129)Proceeds from sale of tangible fixed assets 600 6,451Purchase of investments in securities (121) (1,301)Increase in loans receivable (52) (146) (559)Proceeds from sale of investments in securities 313 3,365Purchase of investments in subsidiaries resulting in change in scope of consolidation － (2,426) －Other, net 132 1,420Net cash used in investing activities (349) (3,753)

Increase (Decrease) in short-term loans (1,103) (11,860)Proceeds from long-term debt 3,738 5,605 40,193Repayment of long-term debt (439) (4,720)Repayment of lease obligations (291) (75) (3,129)Purchase of treasury stock (5) (54)Proceeds from sales of treasury stock 0 0 0Cash dividends paid (58) (623)Net cash provided by financial activities 1,842 19,807

134 1,4414,110 44,193

17,907 192,549

－ 112 －

－ (300) －¥ 22,017 ¥ 17,907 $ 236,742

(Note 1(a))

2010March 31,

Cash and Cash Equivalents at Beginning of Year

Cash Flows from Investing Activities:

(842)(402)

March 31,

Increase in cash and cash equivalents

Effect of Exchange Rate Changes on Cash and

TAMURA CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS


Cash Flows from Operating Activities:

143

2010

Millions of yen

2009


Net Increase in Cash and Cash Equivalents 31(944)

Cash and Cash Equivalents at End of Year (Note 3) exclusion of subsidiaries from consolidation

18,064

Cash Equivalents

Decrease in cash and cash equivalents resulting from

(2,405)

98

8

(106)

(543)

(2,160)

Cash Flows from Financing Activities:

9

resulting from inclusion in consolidation

3,468

2,475

(930)

1,571

(4,968)

10


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies

(a) Basis of presentation of the consolidated financial statements

The accompanying consolidated financial statements of TAMURA CORPORATION (the “Company”) and consolidated subsidiaries (collectively, the “Companies”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards, and have been compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Low of Japan. Certain items presented in the consolidated financial statements submitted to the Director of Kanto Local Finance Bureau in Japan as required by the Financial Instruments and Exchange Law of Japan have been reclassified for the convenience of readers outside Japan. Amounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of ¥93=U.S. $1, the approximate rate of exchange on March 31, 2010 has been used in translation. The inclusion of such amounts is not intended to imply that Japanese yen have been or could be readily converted, realized or settled in U.S. dollars at the above rate or any other rate.

(b) Principles of consolidation

The consolidated financial statements include the accounts of the Company and, with the exception of entities which are not material, those of its 32 majority owned subsidiaries. All significant inter-company accounts and transactions have been eliminated on consolidation. Effective from the year ended March 31, 2010, Tamura Furukawa Machinery Co., Ltd has been excluded from consolidation because it was absorbed into Tamura FA System Co., Ltd. Further P. T. Tamura Electronics Indonesia Co., Ltd., Tohoku Tamura Seisakusho Co., Ltd. and Op-Seed Tsunan Co., Ltd. have been excluded from consolidation because of their liquidation. Investments in non-consolidated subsidiaries and affiliates are carried at cost since their total assets, net sales and the Company’s interests in their net income (loss), or retained earnings, in aggregate, do not have a material effect on the consolidated financial statements. Foreign currency financial statements have been translated into yen at the appropriate year-end current rate except for common stock, capital surplus and certain other inter-company accounts, which are translated at the historical rate. The resulting translation differences are deferred and reflected in the accompanying consolidated balance sheets as “Translation adjustments”. Accounting date of the foreign consolidated subsidiaries is December 31.

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(c) Financial instruments

(1) Derivatives

All derivatives are stated at fair value, with changes in fair value included in net profit or loss for the period in which they arise, except for derivatives designated as “hedging instruments” (see Note 1(c)(3) Hedge accounting below).

(2) Securities

Securities held by the Companies are classified as follows: Held-to-maturity securities are stated at amortized cost. Available-for-sale securities with market values are stated at fair value. Net unrealized gains and losses on these securities are reported as a separate component of shareholders’ equity at a net-of-tax amount. Available-for-sale securities without market values are stated at cost determined by the moving average method, except as stated in the paragraph below. In cases where the fair value of equity securities issued by non-consolidated subsidiaries and affiliates, or available-for-sale securities, has declined significantly and such impairment of the value is not deemed temporary, these securities are written down to their fair value and the resulting losses are included in net profit or loss for the period.

(3) Hedge accounting Deferral hedge accounting is adopted for derivatives which qualify as hedges, under which unrealized gain or loss is deferred as a component of net assets. The derivatives designated as hedging instruments by the Companies are principally commodity futures contracts, forward exchange contracts and interest rate swaps. The underlying hedged items are forecast purchasing transactions for raw materials, trade accounts payable denominated in foreign currencies, forecast transactions denominated in foreign currencies and interest on long-term bank loans. The Companies have a policy to utilize the above hedging instruments in order to reduce the Companies’ exposure to the risk of price fluctuation of raw materials, exchange rate and interest rate fluctuations. Thus, the Companies’ purchases of the hedging instruments are limited to, at maximum, the amount of the hedged items. The Companies evaluate the effectiveness of their hedging activities by reference to the accumulated gains or losses on the hedging instruments and the underlying hedged items from the commencement of the hedges.

(d) Allowance for doubtful accounts Allowance for doubtful accounts is provided at the estimated amount of uncollectible receivables at the balance sheets date.

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(e) Inventories

Inventories are principally stated at cost determined by the following methods:

Finished goods and work-in-process: Electronics components and Power supplies business, Electro-chemical materials

business, Information/Communication equipment business―Mainly periodic average method (Inventories with lower profitability are written down)

Soldering systems business―Specific identification method (Inventories with lower profitability are written down)

Merchandise and raw materials―Mainly periodic average method (Inventories with lower profitability are written down)

Supplies―Mainly last purchase price method (Inventories with lower profitability are written down)

Effective for the year ended March 31, 2009, the Companies adopted “Accounting for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan (the “ASBJ”) on July 5, 2006). As a result, operating loss for the year ended March 31, 2009 increased by ¥269 million and loss before income taxes and minority interests for the year ended March 31, 2009 increased by ¥1,091 million. Inventories are stated at cost, the cost of finished goods and work-in-process being principally determined by the retail method and cost of other inventories being determined by the last purchase price method in the year ended March 31, 2008 at Tamura Kaken Corp., which is a consolidated subsidiary. Effective for the year ended March 31, 2009, Tamura Kaken Corp., which is responsible for Electro-chemical materials business, has changed their method of valuing inventories to being stated at cost determined by the periodic average method. As a result of this change, operating loss and loss before income taxes and minority interests have increased by ¥24 million for the year ended March 31, 2009.

(f) Property, plant and equipment, and depreciation (excluding lease assets)

Property, plant and equipment, including significant capital expenditures and additions, are stated at cost and are principally depreciated using the declining-balance method at rates based on the estimated useful lives of the assets. Repairs and maintenance expenses are charged to income as incurred. Effective for the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries have changed the useful lives of machinery and equipment from 7 to 12 years to 5 to 10 years. The change was due to the re-estimation of useful lives in accordance with the change of the Japanese Corporation Tax Law. As a result, operating loss and loss before income taxes and minority interests for the year ended March 31, 2009 increased by ¥95 million.

(g) Accrued bonuses The Company and its domestic consolidated subsidiaries have provided the estimated amounts of bonus to employees.

13

(h) Reserve for directors’ bonus The Company and its domestic consolidated subsidiaries have provided the estimated amounts of directors’ bonus be provided as a reserve for directors’ bonus. At 31 March 2010, no amount was accrued since bonus to directors of the Company for the year ended 31 March 2010 was not planned to be paid.

(i) Reserve for retirement benefits

The reserve for retirement benefits represents the estimated present value of projected benefit obligations in excess of the fair value of the plan assets. The unrecognized prior service costs are amortized on a straight-line basis over a period of 1 to 12 years from the year in which they arise. The unrecognized actuarial differences are amortized on a straight-line basis over a period of 5 to 12 years from the year following the year in which they arise. Effective for the year ended March 31, 2010, the Companies adopted the “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (Statement No.19 issued by the ASBJ on July 31, 2008). This change has no effect on operating income or loss before income taxes and minority interests for the year ended March 31, 2010.

(j) Amortization of goodwill

Goodwill is amortized over 10 years.

(k) Income taxes The income taxes of the Company and its domestic consolidated subsidiaries consist of corporate income taxes, local inhabitant taxes and enterprise taxes. Deferred income taxes were determined using the assets and liabilities approach, whereby deferred tax assets and liabilities were recognized in respect of temporary differences between the tax basis of assets and liabilities and those as reported in the financial statements. Deferred tax assets relating to tax loss carryforwards are recorded because the Japanese accounting standard requires that the benefit of tax loss carryforwards be estimated and recorded as an asset, with deduction of a valuation allowance if it is expected that some portion or all of the deferred tax assets will not be realized.

(l) Foreign currency translation All monetary assets and liabilities of the Company and its domestic consolidated subsidiaries denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at the exchange rates prevailing at the balance sheets dates. The foreign exchange gains and losses from translation are recognized in the statements of operations to the extent that they are not hedged by forward exchange contracts. Revenue and expenses are translated using the average exchange rates for the respective periods.

14

The balance sheet accounts, revenue accounts and expense accounts of the foreign consolidated subsidiaries are translated into yen at the rate of exchange in effect at the balance sheet date. Differences arising from the translation are presented as translation adjustments and minority interests in its consolidated financial statements.

(m) Net loss per share Basic net loss per share of common stock is computed on the basis of the weighted average number of shares of common stock outstanding during the respective years. Cash dividends per share represent the dividends declared as applicable to the respective period. Basis of calculation of basic net loss per share for the year ended March 31, 2010 and 2009 were as follows:

2. Accounting Changes

(a) Reclassification of Delivery expense Delivery expense in the logistic subsidiary and certain manufacturing subsidiaries was formerly included in cost of sales. From the year ended March 31, 2010, some of the delivery expense which goes on when the subsidiaries sell the merchandises out of the Companies is included in selling general and administrative expense. This change was due to the detailed analysis of the Companies’ occurred cost for the purpose of providing more accurate periodic income, using the enterprise resource planning (ERP) system in certain manufacturing subsidiaries which started its operation this period. As a result of this change, for the year ended March 31, 2010, cost of sales has decreased by ¥649 million ($6,978 thousand), and selling, general and administrative expenses increased by ¥649 million ($6,978 thousand). There was no impact on Segment Information.

Basic net loss per shareTotal net loss in consolidated statements ofoperations ¥ (2,332) ¥ (7,506) $ (25,075)Value not attribute to common stock: ¥ － ¥ － $ －Total net loss attribute to common stock ¥ (2,332) ¥ (7,506) $ (25,075)Average number of shares outstanding during theyear [thousands of shares] 69,503 71,039 69,503

2009Millions of yen

2010U.S. dollars

2010

Thousands of

15

(b) Accounting standard for lease transaction

Until March 31, 2008, noncancelable leases of the Company and its domestic consolidated subsidiaries were accounted for as operating leases (whether such leases were classified as operating or finance leases) except that lease agreements which stipulate the transfer of ownership of the leased assets to the lessee are accounted for as finance leases. Effective for the fiscal year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted a revised accounting standard for leases and related implementation guidance. In accordance with the revised standard, lease transactions which have been entered into on and after April 1, 2008 and do not stipulate the transfer of ownership of the leased assets to the lessee have been accounted for as either finance or operating leases. The effect of this change was immaterial to the consolidated financial statements for the year ended March 31, 2009.

(c) Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements Effective for the year ended March 31, 2009, the Company adopted “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Solution No.18 issued by the ASBJ on May 17, 2006). Accordingly, some revisions are made to the consolidated accounts as necessary. As a result, operating loss and loss before income taxes and minority interests for the year ended March 31, 2009 increased by ¥62 million and retained earnings at the beginning of the year decreased by ¥36 million respectively.

3. Supplementary Cash Flow Information Cash and cash equivalents in the consolidated statements of cash flows are composed of cash in hand, bank deposits able to be withdrawn on demand and short-term investments with a maturity of 3 months or less and which represent a minor risk of fluctuation in value. At March 31, cash and cash equivalents consisted of:

Cash and bank deposits ¥ 22,230 ¥ 18,036 $ 239,032Time deposits with deposit term of over 3 months (213) (129) (2,290) Cash and cash equivalents ¥ 22,017 ¥ 17,907 $ 236,742


20102009Millions of yen

2010

16

4. Financial Instruments

Overview

(a) Policy for financial instruments

The Companies obtain necessary funding in accordance with their capital expenditure planning. The Companies obtain medium and long-term operating funds and funds for the purchase of equipment from banks and utilize highly liquid financial instruments for fund management purposes. The Companies also utilize derivative financial instruments to hedge various risks as described in detail below and do not enter into derivatives for trading or speculative purposes.

(b) Types of financial instruments and related risk

Operating receivables, such as notes and accounts receivable-trade, are exposed to credit risk of customers. Operating receivables in foreign currencies are exposed to foreign currency exchange risk. Forward foreign exchange contracts are principally used to hedge this risk. Investment securities, the issuers of which have business relationships with the Companies, are exposed to stock market fluctuation risk. Maturities of operating debts, such as notes and accounts payable-trade, are mostly within six months. Though operating debts in foreign currencies are exposed to foreign currency exchange risk, they are limited to the balances of operating receivables in the same foreign currency on an ongoing basis. Loans and lease obligations related to finance leases are used mainly for operating funds and for equipment purposes, respectively. Maturities of loans and lease obligations recorded as of the closing date of the fiscal year are within seven years. Almost all long-term loans are variable interest rate loans, and are exposed to interest rate risk. Interest rate swaps are used for certain loans in order to hedge this risk. In order to hedge foreign currency exchange risk associated with operating debts and receivables in foreign currencies and interest rate risk associated with interest expense, derivative transactions such as forward foreign exchange contracts and interest rate swap transactions are used. Hedging instruments, hedged items, hedging policy and effectiveness of hedge transactions are described in “Note 1. Significant Accounting Policies, (c) Financial instruments, (3) Hedge accounting.”

(c) Risk management for financial instruments (1) Monitoring of credit risk (the risk that customers or counterparties may

default)

To screen and reduce unrecoverable risk of operating receivables, the Company regularly monitors major customers’ credit status and manages the due dates and balances for each customer in accordance with customer credit management rules at the sales section in each operating division. Consolidated subsidiaries also act based on the Company’s customer credit management rules. The Companies do not anticipate losses resulting from default of counterparties to derivative transactions as these are limited to major financial institutions with sound credit ratings.

17

(2) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)

The Company and certain consolidated subsidiaries principally use forward foreign exchange contracts to hedge the foreign currency exchange risk of operating debts and receivables in foreign currencies, which are evaluated monthly for each currency. The Company uses the interest rate swap transactions to hedge interest rate risk associated with interest expense. The Company regularly monitors the financial condition of stock issuers and stock market fluctuations and continuously reviews shareholdings considering the market status and business relationship with the Company. Derivative transactions entered into by the Company are implemented and controlled based on internal rules established by the board of directors. The rules which stipulate transaction purpose, nature of transaction, name of counterparty, transaction item, loss limitation and reporting system of risk amount. A derivative transaction which exceeds the limitation amount under the rule requires the approval of the board meeting.

(3) Monitoring of liquidity risk (the risk that the Group may not be able to meet

its obligations on scheduled due dates)

The Company timely formulates and updates the financing plan and controls liquidity risk by managing ready liquidity on the basis of reports from each division to the accounting department of the head office.

(d) Supplementary explanation of the fair value of financial instruments

Fair value of financial instruments is measured based on the quoted market price, if available, or a reasonably assessed value if a quoted market price is not available. Fair value of financial instruments is calculated based on certain valuation assumptions and the fair value might differ if different factors are used. In addition, the contract amount of the derivative transactions described below in “Derivative Transactions” does not represent the market risk of the derivative transactions.

18

Fair value of financial instruments

The book value on the consolidated balance sheets, fair value and difference as of March 31, 2010 are as follows. In addition, financial instruments, for which it is extremely difficult to measure the fair value, are not included. (Please see “2. Financial instruments for which the fair value is extremely difficult to measure.”)

As of March 31, 2010Millions of yen

Cash and bank deposits ¥ 22,230 ¥ 22,230 ¥ －Notes and accounts receivable-trade 17,905 17,905 －Investment securities

Held-to-maturity securities 100 99 (1)Other securities 1,490 1,490 － Total assets ¥ 41,725 ¥ 41,724 ¥ (1)

Notes and accounts payable-trade ¥ 10,688 ¥ 10,688 ¥ －Short-term loans 2,686 2,686 －Current portion of long-term debt 4,302 4,323 21Long-term debt 16,721 17,078 357Lease obligations 1,521 1,530 9

Total liabilities ¥ 35,918 ¥ 36,305 ¥ 387

Derivatives (*)Hedge accounting is not applied ¥ － ¥ － ¥ －Hedge accounting is applied (89) (89) － Total derivatives ¥ (89) ¥ (89) ¥ －

Book value Fair value Difference

19

Notes: 1. Methods to determine the fair value of financial instruments and other

matters related to securities and derivative transactions Assets Cash and bank deposits and notes and accounts receivable-trade

The book value approximates fair value because of the short maturity of these instruments.

Investment securities The fair value of investment securities equals quoted market price. The fair value of debt securities is measured at the price provided by financial institutions. Investment securities based on holding purpose are described in “Note 5. Securities.”

Liabilities Notes and accounts payable-trade and short-term loans

The book value approximates fair value because of the short maturity of these instruments.

Current portion of long-term debt and long-term debt The fair value of current portion of long-term debt and long-term debt is based on the present value of future cash flows discounted using the current borrowing rate for similar debt contracts of comparable maturity.

Lease obligations The fair value of lease obligations is based on the present value of future cash flows discounted using the current interest rate for similar lease contracts of comparable maturity and contract conditions.

Derivative transactions See “Note 15. Derivative Financial Instruments.”

As of March 31, 2010Thousands of U.S. dollars

Cash and bank deposits $ 239,032 $ 239,032 $ －Notes and accounts receivable-trade 192,525 192,525 －Investment securities

Held-to-maturity securities 1,075 1,065 (10)Other securities 16,022 16,022 － Total assets $ 448,654 $ 448,644 $ (10)

Notes and accounts payable-trade $ 114,925 $ 114,925 $ －Short-term loans 28,881 28,881 －Current portion of long-term debt 46,258 46,483 225Long-term debt 179,796 183,634 3,838Lease obligations 16,354 16,451 97

Total liabilities $ 386,214 $ 390,374 $ 4,160

Derivative transactions (*)Not apply hedge accounting $ － $ － $ －Apply hedge accounting (956) (956) － Total derivatives $ (956) $ (956) $ －

(*) The amount is the net balance of total transactions. Amounts reported asliabilities are shown in parentheses.

Fair value DifferenceBook value

20

2. Financial instruments for which the fair value is extremely difficult to measure

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the preceeding table.

3. The aggregate maturities of monetary claims and held-to-maturity securities

at March 31, 2010 were as follows:

4. The aggregate maturities of long-term debt and lease obligations at March 31,

2010 See “Note 7. Short-term Loans and Long-term Debt.”

(Additional information)

Effective for the year ended March 31, 2010, the Companies adopted the “Accounting Standard for Financial Instruments” (Statement No.10 issued by the ASBJ on March 10, 2008) and “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (Guidance No.19 issued by the ASBJ on March 10, 2008).

Millions of yen Thousands of U.S. dollars

Cash and bank deposits ¥ 22,230 ¥ － $ 239,032 $ －Notes and accounts receivable-trade 17,905 － 192,526 －Investment securities Held-to-maturity securities Bonds － 100 － 1,075 Total ¥ 40,135 ¥ 100 $ 431,558 $ 1,075

Due withinone year

Due after 1 yearthrough 5 years

Due withinone year

Due after 1 yearthrough 5 years

Available-for-sale securities without market quotations: Unlisted securities ¥ 466 $ 5,010 Total ¥ 466 $ 5,010


Millions ofyen

2010 2010

21

5. Securities

At March 31, securities consisted of the following:

6. Inventories At March 31, inventories consisted of the following:

7. Short-term Loans and Long-term Debt

Short-term loans at March 31, 2010 and 2009 were principally bank overdrafts and short-term notes bearing interest at annual average interest rates of 2.78% and 2.90%, respectively.

Held-to-maturity securities Book value ¥ 100 ¥ － $ 1,075 Fair value 99 － 1,065 Unrealized loss ¥ (1) ¥ － $ (10)

Available-for-sale securities for which market quotations are available At cost ¥ 1,496 ¥ 1,435 $ 16,086 Fair value 1,490 1,171 16,022 Net ¥ (6) ¥ (264) $ (64)

Available-for-sale securities without market quotations: Unlisted securities ¥ 466 ¥ 182 $ 5,010 Total ¥ 466 ¥ 182 $ 5,010

U.S. dollars2010

Thousands of

U.S. dollarsThousands of

2010

Millions of yen2009

Millions of yen

2010

20092010

Thousands ofMillions of yen

2010 2009 2010U.S. dollars

Merchandise ¥ 1,476 ¥ 1,959 $ 15,871Finished goods 1,410 2,129 15,161Work in process 1,247 1,480 13,409Raw materials and supplies 4,293 5,302 46,161Total ¥ 8,426 ¥ 10,870 $ 90,602

Thousands of

2010U.S. dollarsMillions of yen

2010 2009

22

At March 31, long-term debt consisted of the following:

(*) At March 31, long-term loans consisted of the following:

The aggregate annual maturities of long-term debt at March 31, 2010 were as follows:

8. Retirement Benefit Plan

The Company and certain consolidated subsidiaries have defined benefit retirement plans covering substantially all employees. Benefits under the plans are covered by two plans. One is governed by the regulations of the Defined Benefit Corporate Pension Law and the other is severance indemnity by the Companies. Koha Co., Ltd. also has defined benefit retirement plans covering substantially all employees. Benefits under the plans are covered by three plans. One is employee’s pension fund, second is governed by the regulations of the Defined Benefit Corporate Pension Law and the end is severance indemnity by the Companies.

Millions of yen Thousands of U.S. dollars

Year ending March 31,2012 ¥ 8,509 ¥ 332 $ 91,495 $ 3,5692013 － 344 － 3,6982014 5,712 218 61,419 2,3442015 2,500 107 26,882 1,150

Leaseobligations

Long-termloans

Long-termloans

Leaseobligations

Long-term portion, at annual average rates of1.82% (2009 - 1.64%)

¥ 16,721 ¥ 17,460 $ 179,796

Lease obligations, at annual average rates of3.59%(2009 - 2.31%)

1,200 1,148 12,903

Current portion- Long-term loans, at annualaverage rates of 1.29% (2009 - 1.21%)

4,302 253 46,258

Current portion- Lease obligations, at annualaverage rates of 3.63% (2009 - 2.33%)

321 212 3,451

¥ 22,544 ¥ 19,073 $ 242,408

2009 2010

Thousands ofMillions of yen

2010U.S. dollars

Long-term loans, principally from banks (＊) ¥ 21,023 ¥ 17,713 $ 226,054Lease obligations 1,521 1,360 16,354

22,544 19,073 242,408Less: current portion - Long-term loans (4,302) (253) (46,258)Less: current portion - Lease obligations (321) (212) (3,451) Total ¥ 17,921 ¥ 18,608 $ 192,698

U.S. dollars2010

Millions of yenThousands of

2010 2009

23

The reserve for retirement benefits as of March 31 is analyzed as follows:

Net pension expense related to retirement benefits for the years ended March 31, 2010 and 2009 were as follows:

Assumptions used in the calculation of the above information were as follows:

2010 2009 Discount rate Principally

2.0% Principally

2.0% Expected rate of return on plan assets Principally

2.5% Principally

2.5% Method of attributing the projected benefits to periods of service

straight-line basis

straight-line basis

Amortization of prior service cost 1-12 years 1-12 years Amortization of actuarial differences 5-12 years 5-12 years

9. Shareholders’ Equity

From May 1, 2006, Japanese companies are subject to the Japanese Corporate Law as follows: (a) Upon a resolution by the Board of Directors, appropriations of interim cash

dividends and the related transfer to the legal earned reserve as described in (c) below can be made from unappropriated retained earnings brought forward;

Service cost ¥ 550 ¥ 494 $ 5,913Interest cost 251 244 2,699Expected return on plan assets (133) (189) (1,430)Amortization of prior service cost (52) (63) (559)Amortization of actuarial differences 371 361 3,989 Net pension expense ¥ 987 ¥ 847 $ 10,612

2010 2009 2010

ThousandsMillions of yen U.S. dollars

Projected benefit obligations ¥ 10,313 ¥ 10,563 $ 110,893Plan assets 6,153 5,009 66,161

4,160 5,554 44,732Unrecognized prior service cost (252) (271) (2,709)Unrecognized actuarial differences 2,397 3,669 25,774Prepaid pension cost (107) (272) (1,150)

¥ 2,122 ¥ 2,428 $ 22,817

2009Millions of yen U.S. dollars

Thousands

20102010

24

(b) All other appropriations of retained earnings, including year-end dividends, require approval by the shareholders at the General Meeting of Shareholders; and

(c) An amount equal to at least 10% of cash dividends and other cash distributions paid by the Company from retained earnings must be appropriated from retained earnings as a legal earned reserve. No further appropriation is required when the combined amount of capital reserve and the legal earned reserve pursuant to the Japanese Corporate Law equals 25% of stated capital.

Under the Japanese Corporate Law, Japanese companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the General Meeting of Shareholders.

10. Treasury Stock

The Company has treasury stock of 5,571 thousand shares and 5,558 thousand shares for the years ended March 31, 2010 and 2009, respectively in order to prepare for the exercise of stock options granted to certain directors and employees, subject to the approval of the General Meeting of Shareholders. The amount of treasury stock is stated at cost and is presented as a separate deduction from shareholders’ equity.

11. Selling, General and Administrative Expenses

For the year ended March 31, 2010 and 2009, the significant components of selling, general and administrative expenses were as follows:

12. Research and Development Expenses Total research and development expenses included in manufacturing costs and selling, general and administrative expenses amounted to ¥868 million ($9,333 thousand) in the year ended March 31, 2010 and ¥837 million in the year ended March 31, 2009.

Salaries ¥ 5,072 ¥ 5,742 $ 54,537Pension expense 639 603 6,870Research and development expense 868 837 9,333Freight 1,466 1,309 15,763Addition to reserve for directors’ bonus 29 26 311Addition to accrued bonuses 549 532 5,903

2010 2009 2010


25

13. Income Taxes At March 31, 2010 and 2009, the significant components of deferred tax assets and liabilities were as follows:

A reconciliation between the statutory tax rate and the effective tax rates for th years ended March 31, 2010 and 2009 has been omitted because a net loss for the years was recorded.

14. Leases

Finance lease transactions (lessee)

(a) Finance lease transactions with ownership transfer Lease assets; ・Property, plant and equipment-machinery and equipment in connection with Electronics components and Power supplies business ・Intangible fixed assets – Software Lease assets are depreciated using the same method as fixed assets. (b) Finance lease transactions without ownership transfer Lease assets; ・Property, plant and equipment- machinery and equipment in connection with Electronics components and Power supplies business, research and development facilities, and tools and fixtures in connection with IT ・Intangible fixed assets – Software Lease assets are depreciated by the straight-line method over the respective lease terms, assuming no residual value. The accounting treatment for lease transactions which do not transfer ownership of the assets to the lessee at the end of the lease term which took place on or before March 31, 2008 remains the same treatment as operating lease transactions. Pro forma information regarding leased assets, such as acquisition cost and

Accrued bonuses ¥ 337 ¥ 339 $ 3,624Accrued enterprise taxes 27 8 290Reserve for retirement benefits 1,728 1,796 18,580Tax loss carryforwards 2,438 2,160 26,215Loss on valuation of investment securities 176 63 1,892Loss on impairment of fixed assets 287 244 3,086Other 706 948 7,592 Total 5,699 5,558 61,279Valuation allowance (4,615) (3,305) (49,624) Deferred tax assets ¥ 1,084 ¥ 2,253 $ 11,655

Unrealized gain on securities ¥ 80 ¥ 8 $ 860 Total deferred tax liabilities 80 8 860 Net deferred tax assets ¥ 1,004 ¥ 2,245 $ 10,795

Deferred tax liabilities:

Deferred tax assets:


2010 2009 2010

26

accumulated depreciation under finance leases which do not transfer ownership of the leased assets to the lessee which took place on or before March 31, 2008 for the years ended March 31, 2010 and 2009 is as follows:

The following is a schedule of the future minimum lease payments under such lease contracts as of March 31, 2010 and 2009:

The total lease expense under finance leases for the years ended March 31, 2010 and 2009 was as follows:

15. Derivative Financial Instruments

The Companies do not hold or issue derivatives for trading purposes and it is the Companies’ policy to use derivatives only for the purpose of reducing exposure to market risks and financing costs in accordance with internal policies. The Companies do not anticipate any losses resulting from default of the counterparties as these are limited to major financial institutions with sound operational foundations.

¥ 229 ¥ 436 $ 2,462202 407 2,17218 26 193

2009 20102010

　　Interest expense

　　Lease rental expense　　Depreciation cost

Thousands ofMillions of yen U.S. dollars

¥ 138 ¥ 211 $ 1,483353 496 3,795

¥ 491 ¥ 707 $ 5,279

　　Due within one year　　Due after one year

Thousands of

201020092010Millions of yen U.S. dollars

Cost ¥ 1,083 ¥ 1,302 $ 11,644Accumulated depreciation 605 612 6,505Net amount ¥ 478 ¥ 690 $ 5,139

2010 2009

Structures, machinery and equipment,　and software

Millions of yenThousands ofU.S. dollars

2010

27

As of March 31, 2010 and 2009, there were no derivative transactions outstanding for which hedge accounting has not been applied. The notional amounts and the fair value of the derivative instruments outstanding as of March 31, 2010, for which hedge accounting has been applied are summarized as follows: (a) Foreign currency-related transactions

Millions of yenMain hedged

items

Sell USD ¥ 1,033 ¥ － ¥ (*1) GBP 35 － (*1) SGD 394 － (*1)

Options trading:

USD

Forecasttransactionsin foreigncurrencies

3,881 298 (89)

¥ 5,343 ¥ 298 ¥ (89)

Thousands of U.S. dollarsMain hedged

items

Sell USD $ 11,108 $ － $ (*1) GBP 376 － (*1) SGD 4,236 － (*1)

Options trading:

USD

Forecasttransactionsin foreigncurrencies

41,731 3,204 (956)

$ 57,451 $ 3,204 $ (956)

(*2) Price provided by financial institutions.

Total

Total

(*1) The fair value is included in the fair value of the accounts receivable-trade sincethe foreign exchange forward contracts are accounted for as part of accountsreceivable under the allocation method for hedge accounting.

Accountsreceivable-trade

Accountsreceivable-trade

Forward foreignexchange contracts:

Derivativetransactions

Fair value(*2)


Contractamount

Portion maturingover one year

Contractamount


Fair value(*2)

Forward foreignexchange contracts:

28

(b) Interest rate-related transactions

16. Contingent Liabilities

The Companies were contingently liable as guarantors of borrowings, principally for non-consolidated subsidiaries, in the amounts of ¥210 million ($2,258 thousand) at March 31, 2010 and ¥170 million at March 31, 2009.

17. Loan Commitment

In order to achieve more efficient and flexible financing, the Company has concluded loan commitment contracts with five of our financial institutions. The status of these at the term end is summarized as follows:

Millions of yenMain hedged

items

Pay fixed andreceive variable

Long-termdebt ¥ 19,400 ¥ 15,400 ¥ (*1)

Thousands of U.S. dollarsMain hedged

items

Pay fixed andreceive variable

Long-termdebt $ 208,602 $ 165,591 $ (*1)

(*2) Price provided by financial institutions.

(*1) The fair value is included in the fair value of long-term debt since the shortcutmethod is applied.


Fair value(*2)

Interest-rate swaps:


Fair value(*2)


Contractamount

Interest-rate swaps:


Contractamount

¥ 2,500 ¥ 2,500 $ 26,881 －－－

Net amount ¥ 2,500 ¥ 2,500 $ 26,881

2010Maximum overdraft amount and totalamount of loan commitmentExecuted loan amounts

2010 2009


29

18. Loss on impairment of fixed assets

The Companies have recognized impairment losses for the following group of assets as of March 31, 2010.

Location Use Category Nerima-ku, Tokyo, Japan

Rental Assets Investments and other assets

Nerima-ku, Tokyo, Japan

Enterprise resource planning (ERP) system

Intangible fixed assets, etc.

Nakauonuma-gun, Niigata, Japan

Manufacturing facilities, etc.

Land and building, etc.

New Territories, Hong Kong

Electro-chemical materials warehouse

Buildings and structures

Dongguan City, Guangdong Province, China

Electro-chemical materials facility

Machinery and equipment

The Companies grouped fixed assets based on management reporting classifications and grouped idle properties based on their respective types and use. For the year ended March 31, 2010, the book value of the assets group of liquidated subsidiaries, the profitability of which decreased significantly, were written down to their recoverable value. Total impairment loss of ¥323 million ($3,473 thousand) consisted of ¥130 million ($1,398 thousand) for buildings and structures, ¥27 million ($290 thousand) for machinery and equipment, ¥37 million ($398 thousand) for land, ¥116 million ($1,247 thousand) for other intangible fixed assets and ¥13 million ($140 thousand) for other investments and other assets.

19. Stock Options

(a) Amount of stock options to be expensed for the year ended March 31, 2010 and 2009.

¥ 26 ¥ 17 $ 279Selling, general and administrativeexpenses

2010 2009 2010


30

(b) Outline of stock options and changes a. Outline of stock options

The company's stock option plan was designed as stock compensation to directors and executive officers when the directors retirement benefit plan was abolished in June of 2005.

Koha Co., Ltd.June 23, 2005

Koha Co., Ltd.'sDirectors 7Executive officers 2Auditors 4Employees 196Subsidiaries’ employees 51Advisers 4

Number of stock options Common shares 141,400Grant date October 5, 2005

Condition for vesting

To be the directors, corporateofficers, auditors or employeesof Koha Co., Ltd. or itssubsidiaries is required at theexercise of right.Nevertheless if the stockoption holders retire bytermination of term or

Requisite service period N.A.July 1, 2007 toJune 30, 2011

Date of resolution

Title and number of grantees

Exercise period

TAMURA CORPORATION TAMURA CORPORATION TAMURA CORPORATIONThe 2nd Stock Option Plan The 3rd Stock Option Plan The 4th Stock Option Plan

June 29, 2005 June 29, 2006 June 28, 2007Directors 6 Directors 6 Directors 6 (Exclude outside director) (Exclude outside director) (Exclude outside director)Executive officers 9 Executive officers 6 Executive officers 7

Number of stock options Common shares 35,000 Common shares 28,000 Common shares 30,000Grant date July 1, 2005 July 1, 2006 July 1, 2007

Condition for vesting Retirement of director andexecutive officer

Retirement of director andexecutive officer

Retirement of director andexecutive officer

Requisite service period N.A. N.A. N.A.

July 1, 2006 to July 1, 2007 toJune 30, 2036 June 30, 2037

TAMURA CORPORATION TAMURA CORPORATIONThe 5th Stock Option Plan The 6th Stock Option Plan

June 27, 2008 June 26, 2009Directors 6 Directors 6 (Exclude outside director) (Exclude outside director)Executive officers 6 Executive officers 4

Number of stock options Common shares 42,000 Common shares 77,000Grant date July 1, 2008 July 1, 2009Condition for vesting Retirement of director and

executive officerRetirement of director andexecutive officer

Requisite service period N.A. N.A.

July 1, 2008 to July 1, 2009 toJune 30, 2038 June 30, 2039

Date of resolution


Exercise period

For the period of five yearsfrom the next day ofretirement of director andexecutive officer

Date of resolution


Exercise period

31

b. Stock options granted and changes The transaction of stock option of the year ended Mach 31, 2010 are summarized after converted to shares of stocks.

Number of stock options (Shares)Koha Co., Ltd.June 23, 2005

Before vested Previous fiscal year-end － Granted － Forfeited － Vested － Outstanding －

After vested Increased from newly consolidated subsidiaries 113,900 Vested － Exercised － Forfeited 17,000 Exercisable 96,900

Date of resolution

Number of stock options (Shares)TAMURA CORPORATION TAMURA CORPORATION TAMURA CORPORATIONThe 2nd Stock Option Plan The 3rd Stock Option Plan The 4th Stock Option Plan

June 29, 2005 June 29, 2006 June 28, 2007Before vested Previous fiscal year-end 22,000 22,000 28,000 Granted －－－ Forfeited －－－ Vested 6,000 5,000 9,000 Outstanding 16,000 17,000 19,000After vested Previous fiscal year-end －－－ Vested 6,000 5,000 9,000 Exercised －－ 2,000 Forfeited －－－ Exercisable 6,000 5,000 7,000


June 27, 2008 June 26, 2009Before vested Previous fiscal year-end 42,000 － Granted － 77,000 Forfeited －－ Vested 11,000 － Outstanding 31,000 77,000After vested Previous fiscal year-end －－ Vested 11,000 － Exercised 3,000 － Forfeited －－ Exercisable 8,000 －

Date of resolution

Date of resolution

32

Price information (Yen)TAMURA CORPORATION TAMURA CORPORATION TAMURA CORPORATIONThe 2nd Stock Option Plan The 3rd Stock Option Plan The 4th Stock Option Plan

June 29, 2005 June 29, 2006 June 28, 2007Exercise price 1 1 1Average stock price at exercise －－ 394Fair value at the grant date － 464 653


June 27, 2008 June 26, 2009Exercise price 1 1Average stock price at exercise 394 －

Fair value at the grant date 426 348

Date of resolution

Date of resolution

Price information (Yen)

Koha Co., Ltd.June 23, 2005

Exercise price 1,397Average stock price at exercise －

Fair value at the grant date －

Date of resolution

(c) Valuation technique used for valuating fair value of stock options TAMURA CORPORATION the 5th plan stock options granted in the fiscal year were valuated using the following valuation technique.

Valuation technique: Black-Scholes option-pricing model Principal parameters used in the option-pricing model

TAMURA CORPORATIONThe 5th Stock Option Plan

June 27, 2008Expected volatility(*1) 43.3%Average expected life(*2) 10 yearsExpected dividends(*3) 6 yen per shareRisk-free interest rate(*4) 1.80%

Date of resolution

(*)1. Calculated based on the actual stock prices during the 15 months from

April 2007 to June 2008. 2. The average expected life could not be estimated rationally due to

insufficient amount of data. Therefore, it was estimated assuming that the options were exercised at the 1/3 point of the excise period.

3. The actual dividends on common stock for the fiscal year ended March 31, 2008.

4. Japanese government bond yield corresponding to the average expected life.

33

TAMURA CORPORATION the 6th plan stock options granted in the fiscal year were valuated using the following valuation technique.

Valuation technique: Black-Scholes option-pricing model Principal parameters used in the option-pricing model

TAMURA CORPORATIONThe 6th Stock Option Plan

June 26, 2009Expected volatility(*1) 43.4%Average expected life(*2) 10 yearsExpected dividends(*3) 6 yen per shareRisk-free interest rate(*4) 1.52%

Date of resolution

(*)1. Calculated based on the actual stock prices from April 1999 to June 2009. 2. The average expected life could not be estimated rationally due to

insufficient amount of data. Therefore, it was estimated assuming that the options were exercised at the 1/3 point of the excise period.

3. The actual dividends on common stock for the fiscal year ended March 31, 2009, the dividend policy of the Company and prior years’ actual dividends.

4. Japanese government bond yield corresponding to the average expected life.

(d) Method of estimating number of stock options vested

Only the actual number of forfeited stock options is reflected because it is difficult to rationally estimate the actual number of stock options that will be forfeited in the future.

34

20. Segment Information (a) Industry segments:

The operations of the Companies for the years ended March 31, 2010 and 2009 are summarized by business group as follows:

operatingrevenue

Customers ￥ 41,277 ￥ 19,531 ￥ 2,749 ￥ 24 ￥－￥ 63,581Inter-segment 15 23 － 502 (540) －

41,292 19,554 2,749 526 (540) 63,581

and expenses 41,751 17,528 2,786 525 762 63,352

income (loss) ￥ (459) ￥ 2,026 ￥ (37) ￥ 1 ￥ (1,302) ￥ 229

assets ￥ 36,569 ￥ 22,348 ￥ 1,481 ￥ 422 ￥ 12,065 ￥ 72,885

andamortization ￥ 1,453 ￥ 613 ￥ 129 ￥ 6 ￥ 192 ￥ 2,393

impairmentof fixed assets ￥ 293 ¥ 30 ¥ － ¥ － ¥ － ¥ 323

expenditures ￥ 566 ￥ 322 ￥ 10 ￥ 5 ￥ 17 ￥ 920Capital

Year ended March 31, 2010Millions of yen

Consoli－dated

Corporateand

Eliminations

Electro－

Sales-

systems

chemical

Soldering

Sales and

Operating costs

Information/Communi－

cation equipment Other

materials and

Operating

Electroniccomponentsand Power

supplies

Depreciation

Loss on

Identifiable

35

operatingrevenue

Customers ￥ 49,319 ￥ 23,925 ￥ 4,239 ￥ 24 ￥－￥ 77,507Inter-segment 9 62 (0) 545 (616) －

49,328 23,987 4,239 569 (616) 77,507

and expenses 51,332 22,118 3,811 558 997 78,816

income (loss) ￥ (2,004) ￥ 1,869 ￥ 428 ￥ 11 ￥ (1,613) ￥ (1,309)

assets ￥ 38,715 ￥ 23,569 ￥ 2,456 ￥ 412 ￥ 9,947 ￥ 75,099

andamortization ￥ 1,786 ¥ 777 ¥ 159 ¥ 4 ¥ 164 ¥ 2,890

impairmentof fixed assets ￥ 128 ¥ 458 ¥ － ¥ － ¥ － ¥ 586

expenditures ￥ 1,607 ￥ 846 ￥ 35 ￥ 5 ￥ 224 ￥ 2,717


Consoli－dated

Corporateand

Electro－

equipmentSoldering

Depreciation

Capital

Identifiable

Operating

and Powersupplies systems Eliminations

chemicalmaterials and

Information/Communi－

cation Other

Sales-

Electroniccomponents

Operating costs

Sales and

Loss on

36

(b) Geographic segments: The operations of the Companies for the years ended March 31, 2010 and 2009 are summarized by geographic segment as follows:

operatingrevenue

Customers ￥ 35,133 ¥ 20,694 ¥ 5,994 ¥ 1,760 ¥ － ¥ 63,581Inter-segment 3,765 7,291 59 38 (11,153) －

38,898 27,985 6,053 1,798 (11,153) 63,581

and expenses 38,772 26,639 5,922 1,866 (9,847) 63,352

income (loss) ￥ 126 ¥ 1,346 ¥ 131 ¥ (68) ¥ (1,306) ¥ 229

assets ￥ 53,105 ¥ 21,100 ¥ 1,892 ¥ 1,219 ¥ (4,431) ¥ 72,885

JapanSales and

Europe AmericaAsia Eliminations

North and

Sales-


Consoli－dated

CorporateandSouth

Identifiable

Operating

Operating costs

operatingrevenue

Customers $ 443,839 $ 210,010 $ 29,559 $ 258 $ － $ 683,666Inter-segment 161 247 － 5,398 (5,806) －

444,000 210,257 29,559 5,656 (5,806) 683,666

and expenses 448,935 188,473 29,957 5,645 8,194 681,204

income (loss) $ (4,935) $ 21,784 $ (398) $ 11 $ (14,000) $ 2,462

assets $ 393,215 $ 240,301 $ 15,925 $ 4,537 $ 129,731 $ 783,709

andamortization $ 15,624 $ 6,591 $ 1,387 $ 64 $ 2,065 $ 25,731

impairmentof fixed assets $ 3,151 $ 322 $ － $ － $ － $ 3,473

expenditures $ 6,086 $ 3,462 $ 107 $ 54 $ 183 $ 9,892Capital

Loss on

and Powercomponents

Consoli－dated

Identifiable

Depreciation

Sales and

Sales-

Operating costs

Operating

Eliminationsequipment Othercation Soldering

Electro－chemical Information/

Communi－ Corporateand

Electronicmaterials and

supplies systems

Year ended March 31, 2010Thousands of U.S. dollars

37

operatingrevenue

Customers ￥ 40,087 ¥ 27,630 ¥ 7,013 ¥ 2,777 ¥ － ¥ 77,507Inter-segment 5,466 10,610 111 95 (16,282) －

45,553 38,240 7,124 2,872 (16,282) 77,507

and expenses 45,894 37,743 6,950 2,943 (14,714) 78,816

income (loss) ￥ (341) ¥ 497 ¥ 174 ¥ (71) ¥ (1,568) ¥ (1,309)

assets ￥ 52,872 ¥ 21,817 ¥ 2,507 ¥ 1,363 ¥ (3,460) ¥ 75,099


Consoli－dated

Corporateand

EliminationsAmericaJapan

Operating

Operating costs

Sales-

Sales andAsia Europe

North andSouth

Identifiable

operatingrevenue

Customers $ 377,774 $ 222,516 $ 64,452 $ 18,924 $ － $ 683,666Inter-segment 40,483 78,398 634 409 (119,924) －

418,257 300,914 65,086 19,333 (119,924) 683,666

and expenses 416,903 286,441 63,677 20,064 (105,881) 681,204

income (loss) $ 1,354 $ 14,473 $ 1,409 $ (731) $ (14,043) $ 2,462

assets $ 571,022 $ 226,881 $ 20,344 $ 13,107 $ (47,645) $ 783,709

AmericaandSouth

Corporate

EliminationsConsoli－

datedEuropeAsia

North and

Japan

Identifiable

Operating costs

Sales and

Sales-

Operating

Thousands of U.S. dollarsYear ended March 31, 2010

38

Total exports by domestic operations and sales by overseas branches and subsidiaries for the years ended March 31, 2010 and 2009, were as follows:

Notes: 1. Overseas net sales include export sales of the Company and its domestic

consolidated subsidiaries and sales (other than exports to Japan) of its foreign consolidated subsidiaries.

2. Countries and areas are segmented based on their geographical proximity and their mutual operational relationship.

3. Major countries and areas which belong to segments other than Japan are as follows:

(1)Asia Malaysia, Singapore, China, and Taiwan (2)Europe The United Kingdom, Czech and other European countries (3)North and South

America The United States (4)Other Australia

Export sales $ 265,462 $ 65,602 $ 17,000 $ 32 $ 348,096Total sales 683,666Export sales as percentage of

total sales 38.8% 9.6% 2.5% 0.0% 50.9%

Other TotalEurope AmericaSouth

Year ended March 31, 2010Thousands of U.S. dollars

Asia

North and

Export sales ￥ 31,826 ¥ 6,841 ¥ 3,051 ¥ 0 ¥ 41,718Total sales 77,507Export sales as percentage of

total sales 41.1% 8.8% 3.9% 0.0% 53.8%

South

Millions of yen

Total

North and

AmericaEurope

Year ended March 31, 2009

Asia Other

Export sales ￥ 24,688 ¥ 6,101 ¥ 1,581 ¥ 3 ¥ 32,373Total sales 63,581Export sales as percentage of

total sales 38.8% 9.6% 2.5% 0.0% 50.9%

Europe America

North andSouth

Asia Other Total


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22. Subsequent Events

Acquisition of Romarsh Ltd.

At the board of directors meeting held on April 27, 2010, the Company resolved to purchase all the outstanding shares of Romarsh Ltd. through an acquisition by Tamura Europe Ltd., a subsidiary of the Company. The acquisition of Romarsh Ltd. was completed on April 29, 2010.

(a) Objectives

The Company plans to expand sales of large size transformers and reactors for industrial energy markets over the medium term in the Electronics components and Power supplies business. Romarsh Ltd. manufactures and distributes products in the same category with its joint venture with an Indian company. The Company made a friendly acquisition of Romarsh Ltd. through the wholly owned subsidiary in the United Kingdom to acquire this product market and the manufacturing base in India, and aims to establish a firm position and become the leader in the global market.

(b) Sellers of Romarsh Ltd. shares Phil Crawford-Smith Danny (and Linda) Zirger Paul Ling Peter Haigh Ted Lines They are board members or employees of Romarsh Ltd.

(c) Acquired company

Trade name ROMARSH LIMITED Head office Wiltshire, the United Kingdom Representative Stewart Cursley, President Operations Manufacturing and distribution of large size transformers

and reactors for industrial energy markets for Romarsh Ltd. and its joint venture in India (Romarsh Elcomponics Technologies Pvt. Ltd.)

Capital ￡63,936

(d) Acquisition date April 29, 2010

(e) Others Number of shares purchased: 63,936 Acquisition cost: ￡6,200,000 Shareholding ratio after acquisition: 100%

consolidated financial statements tamura … file5 tamura corporation and consolidated subsidiaries...

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