t a i y o y u d e n co., ltd. and subsidiariespdf.irpocket.com/c6976/argx/vcqa/tv9r.pdf · t a i y...

T A I Y O Y U D E N CO., LTD.

and SUBSIDIARIES

Consolidated Financial Statements for the Years Ended March 31, 2011 and 2010 with Independent Auditors' Report

Independent Auditors' Report To the Board of Directors of TAIYO YUDEN CO., LTD.: We have audited the accompanying consolidated balance sheets of TAIYO YUDEN CO., LTD.and consolidated subsidiaries as of March 31, 2011 and 2010, the related consolidatedstatements of operations and comprehensive income for the year ended March 31, 2011,statement of operations for the year ended March 31, 2010, and statements of changes innet assets and cash flows for each of the years then ended expressed in Japanese yen.These consolidated financial statements are the responsibility of the Company’smanagement. Our responsibility is to independently express an opinion on theseconsolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position of TAIYO YUDEN CO., LTD. and subsidiaries as ofMarch 31, 2011 and 2010, and the results of their operations and their cash flows for theyears then ended, in conformity with accounting principles generally accepted in Japan. Without qualifying our opinion, we draw attention to Note 16 to the consolidated financialstatements, in which the comprehensive income for the year ended March 31, 2010 isdisclosed. The U.S. dollar amounts in the accompanying consolidated financial statements with respectto the year ended March 31, 2011 are presented solely for convenience. Our audit alsoincluded the translation of yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 1 to the consolidated financialstatements. (KPMG AZSA LCC)Tokyo, JapanJune 29, 2011

Consolidated Financial StatementsConsolidated Balance SheetsTAIYO YUDEN CO., LTD. and Subsidiaries

March 31, 2011 and 2010

Thousands ofU.S. Dollars

(Note 1)ASSETS 2011 2010 2011

Current assets: Cash and cash equivalents (Note 4) \38,812 \40,452 $467,613 Time deposits (Note 4) 1,146 1,333 13,804 Receivables: Trade notes and accounts receivable (Note 4) 41,191 48,698 496,274 Allowance for doubtful receivables (216) (266) (2,607) Inventories: Merchandise and Finished products 13,276 10,842 159,947 Work in process 9,319 8,148 112,277 Raw materials and supplies 9,893 9,651 119,195 Deferred tax assets (Note 10) 1,774 1,903 21,378 Prepaid expenses and other current assets 4,381 5,625 52,792

Total current assets 119,576 126,386 1,440,673

Property, plant and equipment (Note 12): Land 7,716 7,799 92,962 Buildings and structures 62,069 64,511 747,822 Machinery and equipment 179,945 193,309 2,168,009 Tools, furniture and fixtures 17,649 18,430 212,635 Construction in progress 10,742 5,655 129,423

Total 278,121 289,704 3,350,851

Accumulated depreciation (190,518) (195,167) (2,295,397)

Net property, plant and equipment 87,603 94,537 1,055,454

Investments and other assets: Investment securities (Notes 4 and 5) 4,149 4,729 49,986 Investments in affiliate (Note 4) 528 529 6,365 Goodwill 2,646 3,490 31,881 Deferred tax assets (Note 10) 3,626 3,469 43,688 Other 3,395 3,532 40,903 Allowance for doubtful receivables (250) (310) (3,014)

Total investments and other assets 14,094 15,439 169,809

Total assets \221,273 \236,362 $2,665,936

See accompanying Notes to Consolidated Financial Statements.

Millions of Yen

Thousands ofU.S. Dollars

(Note 1)LIABILITIES AND NET ASSETS 2011 2010 2011

Current liabilities: Short-term borrowings (Notes 4 and 6) \2,997 \5,868 $36,105 Current portion of long-term borrowings (Notes 4 and 6) 12,540 4,061 151,082 Notes and accounts payable: Trade notes and accounts payable (Note 4) 17,048 18,544 205,397 Other (Note 4) 10,289 3,556 123,959 Income taxes payable (Note 4) 1,120 1,565 13,500 Accrued bonuses for employees 2,952 2,720 35,564 Accrued bonuses for directors 47 23 562 Deferred tax liabilities (Note 10) 484 575 5,836 Other 7,926 8,662 95,495

Total current liabilities 55,403 45,574 667,500

Long-term liabilities: Long-term borrowings (Notes 4 and 6) 9,470 22,011 114,092 Convertible bonds with stock acquisition rights (Notes 4 and 6) 20,000 20,000 240,964 Lease liabilities (Note 6) 2,010 2,786 24,216 Accrued retirement benefits for employees (Note 7) 3,400 3,262 40,964 Accrued retirement benefits for directors and corporate auditors 137 136 1,649 Deferred tax liabilities (Note 10) 2,301 2,300 27,728 Negative goodwill 52 73 624 Other 874 957 10,535

Total long-term liabilities 38,244 51,525 460,772

Total liabilities 93,647 97,099 1,128,272

Commitment and contingent liabilities (Notes 11 and 13):

Net assets (Note 8)Shareholders' equity: Common stock Authorized - 300,000,000 shares Issued - 120,481,395 shares in 2011 and 2010 23,557 23,557 283,822 Capital surplus 41,471 41,471 499,653 Retained earnings (Note 20) 89,302 95,984 1,075,924 Treasury stock, at cost - 2,894,450 shares in 2011 (3,621) (3,592) (43,625)

and 2,871,429 shares in 2010

Total shareholders' equity 150,709 157,420 1,815,774

Accumulated other comprehensive income: Net Unrealized Holding Gains (Losses) on Securities 382 695 4,599 Deferred Gains (Losses) on Hedges (50) (96) (600) Foreign currency translation adjustments (23,975) (19,260) (288,858)

Total accumulated other comprehensive income (23,643) (18,661) (284,859)

Stock acquisition rights (Note 15) 288 248 3,465Minority interests 272 256 3,284

Total net assets 127,626 139,263 1,537,664

Total liabilities and net assets \221,273 \236,362 $2,665,936


Millions of Yen

Consolidated Statements of OperationsTAIYO YUDEN CO., LTD. and Subsidiaries

March 31, 2011 and 2010 Thousands of U.S. Dollars

(Note 1)2011 2010 2011

NET SALES (Note 18) \210,402 \195,691 $2,534,962

COST OF SALES 　 164,472 159,119 1,981,588

Gross profit 45,930 36,572 553,374

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 37,138 32,368 447,442

Operating income (Note 18) 8,792 4,204 105,932 OTHER INCOME (EXPENSES): Interest and dividends income 254 236 3,063 Interest expense (477) (597) (5,741) Equity in earnings of affiliates 2 3 19 Loss on foreign exchange (1,442) (1,820) (17,372)　 Depreciation of inactive noncurrent assets (546) (297) (6,579) Gain on sales of property, plant and equipment 941 363 11,341 Loss on disposal and sales of property, plant and equipment (2,172) (800) (26,176) Loss on disposal of inventories (313) (844) (3,771) Impairment loss on property, plant and equipment (Note 12) (7,343) (181) (88,474) Subsidy income 58 167 703 Life insurance dividends income 58 43 696 Loss on adjustment for changes of accounting standard for asset retirement obligations (27) - (329) Loss on (earthquake) disaster (Note 17) (1,410) - (16,982) Other (28) (49) (347) Other expenses - net (12,445) (3,776) (149,949) INCOME (LOSS) BEFORE INCOME TAXES AND

MINORITY INTERESTS (3,653) 428 (44,017)

INCOME TAXES (Note 10) Current 1,879 1,594 22,633 Deferred (42) (494) (508) Total income taxes 1,837 1,100 22,125

LOSS BEFORE MINORITY INTERESTS (5,490) (672) (66,142)

MINORITY INTERESTS 16 8 198

NET LOSS \(5,506) \(680) $(66,340)

U.S. Dollars Yen (Note 1)PER SHARE OF COMMON STOCK (Note 19):

Basic net loss \(46.82) \(5.78) $(0.56) Diluted net income - - - Cash dividends applicable to the year 10.00 10.00 0.12


Millions of Yen

Consolidated Statement of Comprehensive IncomeTAIYO YUDEN CO., LTD. and Subsidiaries

March 31, 2011 Thousands of U.S. Dollars

(Note 1)2011 2011

LOSS BEFORE MINORITY INTERESTS \(5,490) $(66,142)

OTHER COMPREHENSIVE INCOME (Note 16): Net unrealized holding losses on securities (313) (3,775) Deferred gains on hedges 46 564 Foreign currency translation adjustments (4,715) (56,816)

Total other comprehensive income (4,982) (60,027)COMPREHENSIVE INCOME (Note 16) \(10,472) $(126,169)

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note 16): Owners of the parent \(10,488) $(126,363) Minority interests 16 194

Millions of Yen

Consolidated Statements of Changes in Net AssetsTAIYO YUDEN CO., LTD. and SubsidiariesMarch 31, 2011 and 2010

Thousands Millions of Yen

Shareholders' Equity

CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock, at

Cost

TotalShareholders'

Equity

BALANCE, MARCH 31, 2010 120,481 \23,557 \41,471 \95,984 \(3,592) \157,420Changes during the year Cash dividends, \10.00 per share (1,176) (1,176) Net loss (5,506) (5,506) Treasury stock acquired (23,021 shares) (29) (29) Changes other than shareholders' equity Total changes - - - (6,682) (29) (6,711)BALANCE, MARCH 31, 2011 120,481 \23,557 \41,471 \89,302 \(3,621) \150,709

Millions of Yen

Accumulated Other Comprehensive IncomeNet

UnrealizedHolding Gains(Losses) onSecurities

DeferredGains

(Losses) onHedges

ForeignCurrency

TranslationAdjustments

TotalAccumulated

OtherComprehensive

Income

StockAcquisition

Rights

MinorityInterests

Total NetAssets

BALANCE, MARCH 31, 2010 \695 \(96) \(19,260) \(18,661) \248 \256 \139,263Changes during the year Cash dividends, \10.00 per share (1,176) Net loss (5,506) Treasury stock acquired (23,021 shares) (29) Changes other than shareholders' equity (313) 46 (4,715) (4,982) 40 16 (4,926) Total changes (313) 46 (4,715) (4,982) 40 16 (11,637)BALANCE, MARCH 31, 2011 \382 \(50) \(23,975) \(23,643) \288 \272 \127,626

Thousands of U.S. Dollars (Note 1)


CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock, at

Cost

TotalShareholders'

Equity

BALANCE, MARCH 31, 2010 $283,822 $499,653 $1,156,433 $(43,280) $1,896,628Changes during the year Cash dividends, $0.12 per share (14,169) (14,169) Net loss (66,340) (66,340) Treasury stock acquired (23,021 shares) (345) (345) Changes other than shareholders' equity Total changes - - (80,509) (345) (80,854)BALANCE, MARCH 31, 2011 $283,822 $499,653 $1,075,924 $(43,625) $1,815,774

Thousands of U.S. Dollars (Note 1)



DeferredGains

(Losses) onHedges

ForeignCurrency


TotalAccumulated

OtherComprehensive

Income

StockAcquisition

Rights

MinorityInterests

Total NetAssets

BALANCE, MARCH 31, 2010 $8,374 $(1,164) $(232,042) $(224,832) $2,989 $3,090 $1,677,875Changes during the year Cash dividends, $0.12 per share (14,169) Net loss (66,340) Treasury stock acquired (23,021 shares) (345) Changes other than shareholders' equity (3,775) 564 (56,816) (60,027) 476 194 (59,357) Total changes (3,775) 564 (56,816) (60,027) 476 194 (140,211)BALANCE, MARCH 31, 2011 $4,599 $(600) $(288,858) $(284,859) $3,465 $3,284 $1,537,664


Number ofShares ofCommon

Stock Issued

Thousands Millions of Yen


CommonStock

CapitalSurplus

RetainedEarnings

TreasuryStock, at

Cost

TotalShareholders'

Equity

BALANCE, MARCH 31, 2009 120,481 \23,557 \41,451 \97,840 \(3,643) \159,205Changes during the year

Cash dividends, \10.00 per share (1,176) (1,176) Disposal of treasury stock (56,000 shares) 20 70 90 Net loss (680) (680) Treasury stock acquired (17,031 shares) (19) (19) Changes other than shareholders' equity Total changes - - 20 (1,856) 51 (1,785)BALANCE, MARCH 31, 2010 120,481 \23,557 \41,471 \95,984 \(3,592) \157,420

Millions of Yen



DeferredGains

(Losses) onHedges

ForeignCurrency


TotalAccumulated

OtherComprehensive

Income

StockAcquisition

Rights

MinorityInterests

Total NetAssets

BALANCE, MARCH 31, 2009 \(551) \(7) \(19,762) \(20,320) \303 \248 \139,436Changes during the year Cash dividends, \10.00 per share (1,176) Disposal of treasury stock (56,000 shares) 90 Net loss (680) Treasury stock acquired (17,031 shares) (19) Changes other than shareholders' equity 1,246 (89) 502 1,659 (55) 8 1,612 Total changes 1,246 (89) 502 1,659 (55) 8 (173)BALANCE, MARCH 31, 2010 \695 \(96) \(19,260) \(18,661) \248 \256 \139,263


Number ofShares ofCommon

Stock Issued

Consolidated Statements of Cash FlowsTAIYO YUDEN CO., LTD. and Subsidiaries

March 31, 2011 and 2010

Thousands of U.S. Dollars

Millions of Yen (Note 1)2011 2010 2011

Operating activities: Income (loss) before income taxes and minority interests \(3,653) \428 $(44,017)

Adjustments to reconcile income (loss) before income tax and minority interests to net cash provided by operating activities: Depreciation and amortization 19,310 23,922 232,650 Impairment loss on property, plant and equipment 7,343 181 88,474 Loss on adjustment for changes of accounting standard for

asset retirement obligations 27 - 329 Loss on (earthquake) disaster 1,410 - 16,982 Amortization of goodwill 844 244 10,173 Amortization of negative goodwill (21) (21) (250) Increase (decrease) in allowance for doubtful receivables (95) 74 (1,141) Increase in accrued bonuses for employees 237 1,488 2,859 Increase in accrued bonuses for directors and

corporate auditors 24 23 289 Increase in accrued retirement benefits for directors

and corporate auditors 6 10 73 Interest and dividend income (254) (236) (3,063) Interest expense 477 597 5,741 Equity in earnings of affiliates (2) (3) (19) Loss on disposal and sales of property, plant

and equipment 1,231 437 14,835 Changes in operating assets and liabilities: Trade receivables 4,415 (13,101) 53,199 Inventories (4,784) 3,164 (57,645) Trade payables 852 8,497 10,269 Other 191 1,068 2,281

Subtotal 27,558 26,772 332,019

Interest and dividends received 252 265 3,045 Interest paid (489) (613) (5,895) Income taxes paid (2,102) (762) (25,321)

Net cash provided by operating activities 25,219 25,662 303,848

Investing activities: Purchases of property, plant and equipment (17,519) (9,353) (211,076) Proceeds from sales of property, plant and equipment 1,011 581 12,177 Purchases of investment securities (125) (340) (1,508) Decrease in time deposits 84 2,811 1,016 Purchase of investments in new subsidiaries (Note 9): - (2,789) - Other (46) 172 (548)

Net cash used in investing activities (16,595) (8,918) (199,939)

Financing activities: Decrease in short-term borrowings (2,733) (7,944) (32,924) Proceeds from long-term borrowings - 6,000 - Repayments of long-term borrowings (4,062) (6,968) (48,942) Payments of cash dividends (1,178) (1,176) (14,195) Purchases of treasury stock (29) (19) (345) Proceeds from sale and lease-back transactions - 1,655 - Repayments of lease obligations (945) (325) (11,386) Other (1) 1 (20)

Net cash used in financing activities (8,948) (8,776) (107,812)

Effect of exchange rate changes on cash and cash equivalents (1,316) (627) (15,857)

Net increase (decrease) in cash and cash equivalents (1,640) 7,341 (19,760)

Cash and cash equivalents, beginning of year 40,452 33,111 487,373

Cash and cash equivalents, end of year \38,812 \40,452 $467,613


Notes to Consolidated Financial StatementsTAIYO YUDEN CO., LTD. and SubsidiariesMarch 31, 2011 and 2010

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Consolidation Policies The consolidated financial statements include the accounts of the Company and all of its subsidiaries (together the "Companies"). The Japanese accounting standards for consolidation requires the control or influence concept for the consolidation scope of subsidiaries and affiliates. As of March 31st, 2011, the number of conolidated subsidiaries and affiliates was 35 and 1. Taiyo Fukushi Co., Ltd. was merged into Sun Vertex Co., Ltd. in the current fiscal year ended March 31, 2011, and thus is excluded from the scope of consolidation. TRDA, INC. was merged into TAIYO YUDEN (U.S.A.) INC. in the current fiscal year, and thus is excluded from the scope of consolidation. Significant intercompany accounts, transactions and unrealized profits have been eliminated in consolidation. The difference between cost of the Company's investments in subsidiaries and its equity in their net assets at the dates of acquisition ("goodwill" or "negative goodwill" acquired before March 2010) is being amortized over the subsequent five-year periods. Investment in affiliate is accounted for by the equity method. Net income (loss) includes the equity in the current net earnings (losses) of such company after the elimination of unrealized intercompany profit.

(2) Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposit, and short-term investments with original maturities of three months or less, that are readily convertible into known amount of cash and are so near maturity that they present negligible risk of changes in value. (3) Foreign Currency Transactions Short-term and long-term foreign currency monetary items are translated into Japanese yen at appropriate fiscal year-end current rates. The resulting net losses are shown as “Loss on foreign exchange” in the accompanying consolidated statements of operations. (4) Foreign Currency Financial Statements In translating the financial statements of foreign subsidiaries for the purpose of consolidation, all assets and liabilities are translated into Japanese yen at appropriate fiscal year-end current rates while net assets accounts are translated at historical rates. Revenue and expense items are translated at the average rates during the fiscal year. The resulting translation differences are shown as “Foreign currency translation adjustments” in net assets at March 31, 2011 and 2010 in the accompanying consolidated balance sheets.

The accompanying consolidated financial statements of TAIYO YUDEN CO., LTD. (the"Company") and its consolidated subsidiaries have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its relatedaccounting regulations, and in conformity with accounting principles generally accepted in Japan("Japanese GAAP"), which are different in certain respects as to application and disclosurerequirements from International Financial Reporting Standards.Effective from the fiscal year ended March 31, 2011, the Company adopted the "AccountingStandard for Presentation of Comprehensive Income" (Accounting Standard Board of Japan("ASBJ") Statement No. 25, issued on June 30, 2010) and the "Revised Accounting Standardfor Consolidated Financial Statements" (ASBJ Statement No. 22, issued on December 26, 2008).As a result of the adoption of the standards, the Company prepared the consolidated statementof comprehensive income for the fiscal year ended March 31, 2011.The accounts of consolidated overseas subsidiaries are prepared in accordance with eitherInternational Financial Reporting Standards or U.S. generally accepted accounting principles, andpartially reflect the adjustments which are necessary to conform with Japanese GAAP.The accompanying consolidated financial statements have been reformatted and translated intoEnglish (with some expanded descriptions) from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP and filed with the appropriate LocalFinance Bureau of the Ministry of Finance as required by the Financial Instruments andExchange Act. Certain supplementary information included in the statutory Japanese languageconsolidated financial statements is not presented in the accompanying consolidated financialstatements.The translations of the Japanese yen amounts into U.S. dollars are included solely for theconvenience of readers outside Japan, using the prevailing exchange rate at March 31, 2011,which was ¥83 to U.S. $1. The translations should not be construed as representations of whatthe Japanese yen amounts have been, could have been, or could in the future be whenconverted into U.S. dollars at this or any other rate of exchange.

(5) Debt and Equity Securities The Companies classify debt and equity securities, depending on management's intent, as follows: (ⅰ) Held-to-maturity debt securities, for which management has the positive intent and ability to hold to maturity, are reported at amortized cost. (ⅱ) Available-for-sale securities represent securities not classified as either trading securities or held-to-maturity debt securities. Available-for-sale securities, which have fair value, are reported at fair value with unrealized gains, net of applicable taxes at March 31, 2011 and 2010. Available-for-sale securities, which do not have fair value, are stated at cost using the moving-average method. Equities of limited liability partnerships for investment business and of other similar partnerships (defined as "securities" by Article 2, Section 2 of the Financial Instruments and Exchange Act) are valued at the net equity equivalents based on the recently available financial statements of the partnership corresponding to the reporting dates of the financial statements defined by the partnership agreements.

(6) Inventories Inventories are stated primarily at cost, determined by the average method for merchandise, finished products and work in process and by the first-in, first-out (FIFO) method for raw materials and supplies, modified by the writing down below cost to net realizable value.

(7) Property, Plant and Equipment (Except for the leased assets) Property, plant and equipment are stated at cost. For the Company and domestic consolidated subsidiaries, depreciation is principally computed by the declining-balance method at rates based on the estimated useful lives of the assets, except that the straight-line method is applied to building acquired after April 1, 1998. Useful lives of the assets and residual value of the assets are mainly estimated in consistent with the method accepted under the corporate tax law in Japan. For foreign subsidiaries, depreciation is principally computed by straight-line method.

(8) Leased Assets (ⅰ) Leased assets, ownership of which is considered to be transferred to the lessee, are depreciated in the same manner as property, plant and equipment. (ⅱ) Leased assets, ownership of which is not considered to be transferred to the lessee, are depreciated over the leased term by the straight-line method with no residual value, except for finance leases commencing prior to March 31, 2008, which are accounted for in the same manner as operating leases.

(9) Allowance for Doubtful Receivables The Company and its domestic consolidated subsidiaries provide the allowance for doubtful accounts based

on the percentage of actual bad debt losses against the balance of total receivables and the amount of uncollectible receivables estimated on an individual basis. Overseas consolidated subsidiaries record the allowance based primarily on the amount of uncollectible receivables estimated on an individual basis.

(10) Accrued Retirement Benefits for Employees Accrued retirement benefits for employees at certain consolidated subsidiaries are provided at the amount incurred during the fiscal year, which is based on the estimated present value of the projected benefit obligation less the estimated fair value of plan assets at the end of the fiscal year. Also, certain domestic consolidated subsidiaries provide allowance for accrued pension and severance costs.

(11) Accrued Retirement Benefits for Directors and Corporate Auditors Certain subsidiaries of the Company provide lump-sum severance benefits for directors and corporate auditors. The accrued retirement benefits for directors and corporate auditors are provided at the amount which would be required based on their internal regulations if all directors and corporate auditors retired at the balance sheet date.

(12) Accrued Bonuses for Employees Allowance for bonuses to employees are provided by the estimated amounts, which are obligated to pay to employees after the fiscal year-end, based on services provided during the current period.

(13) Accrued Bonuses for Directors Allowance for bonuses to directors are provided by the estimated amounts, which are obligated to pay to directors after the fiscal year-end, based on services provided during the current period.

(14) Income Taxes The provision for income taxes is computed based on the pretax income for the financial reporting purposes. Deferred tax assets and liabilities are recognized for expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. A valuation allowance is recorded to reduce deferred tax assets if it is not probable that deferred tax assets will be realized in the future.

(15) Research and Development Costs Expenditures by the Company and certain subsidiaries for development of specified new products are charged to income as incurred and were \8,476 million ($102,117 thousand) and \7,699 million for the years ended March 31, 2011 and 2010, respectively.

(16) Derivative and Hedging Activities 　　　　 Companies are required to state derivative instruments at fair value and to recognize changes in the fair value as gains or losses unless derivative instruments are used for hedging purposes. The Company defers recognition of gains or losses resulting from changes in fair value of derivative instruments until the related losses or gains on the hedged items are recognized. If interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed. The derivative transactions are executed and managed by the finance and accounting division in accordance with the established policies and within the specified limits on the amounts of derivative transactions allowed.

(17) Per Share Information Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding in each period, retroactively adjusted for stock splits. Basic net loss per share for the years ended March 31, 2011 and 2010 are computed in accordance with Japanese accounting standards. Although diluted shares exist for the years ended March 31, 2011 and 2010, diluted net income per share are not calculated since there is net loss per share for the periods. Cash dividends per share consist of interim and year-end dividends and are accounted for in the year they are declared rather than in the year in which they are actually paid.

(18) Certain Reclassifications Certain reclassifications of prior year's amounts have been made to conform to the presentation for 2011. (19) Additional information Our operation which has nature of global control and research and development has been gradually increasing with the expansion of foreign bases. With reorganization conducted during the fiscal year ended March 2010, we reviewed segregation of operations of each department, and recalculated the cost with appropriate contents of operations. As the result, part of the cost previously recorded under cost of goods manufactured is recorded under selling, general and administrative expenses from the fiscal year ended March 31, 2010. Consequently, compared to the amounts that would have been reported under the previous accounting method, cost of sales decreased by \1,436 million and gross profit increased by same amount. Additionally, selling, general and administrative expenses increased by \1,609 million and the operating income decreased by \173 million for the year ended March 31, 2010.

3. CHANGES IN ACCOUNTING STANDARDS

a. Equity Method of Accounting for Investments Effective from the fiscal year ended March 31, 2011, the Company adopted the "Accounting Standard for Equity Method of Accounting for Investments" (ASBJ Statement No. 16, issued on March 10, 2008) and the "Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method" (Practical Issues Task Force No. 24, issued on March 10, 2008). The adoption of the new accounting standard had no impact on the consolidated financial statements for the year ended March 31, 2011.

b. Asset Retirement Obligations Effective from the fiscal year ended March 31, 2011, the Company and its consolidated domestic subsidiaries adopted the "Accounting Standard for Asset Retirement Obligations" (ASBJ Statement No. 18, issued on March 31, 2008) and the "Guidance on Accounting Standard for Asset Retirement Obligations" (ASBJ Guidance No. 21, issued on March 31, 2008). The adoption of the new accounting standard had no material impact on the consolidated financial statements for the year ended March 31, 2011.

c. Business Combinations Effective from the fiscal year ended March 31, 2011, the Company and its consolidated domestic subsidiaries adopted the "Accounting Standard for Business Combinations" (ASBJ Statement No. 21, issued on December 26, 2008), the "Accounting Standard for Consolidated Financial Statements" (ASBJ Statement No. 22, issued on December 26, 2008), the "Partial Amendments to Accounting Standard for Research and Development Costs" (ASBJ Statement No. 23, issued on December 26, 2008), the "Accounting Standard for Business Divestitures" (ASBJ Statement No. 7, issued on December 26, 2008), the "Accounting Standard for Equity Method of Accounting for Investments" (ASBJ Statement No. 16, issued on December 26, 2008), and the "Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures" (ASBJ Guidance No. 10, issued on December 26, 2008).

4. Financial instruments

(1) Qualitative information on financial instruments a. Group policy for financial instruments

b. Risk management for financial instruments

c. Supplemental information on market value of financial instruments

Financial instruments without market quotations are stated at reasonably calculated value.Such a value is calculated based on variable factors. Therefore, the value may be changeddepending on prerequisites to be adopted.

The Companies, which mainly produce and market electronic components, procure short-term operating funds with bank loans, and long-term funds for capital investment, etc. withbank loans and issuance of bonds in accordance with a capital investment plan.Temporary surplus funds are managed as safe and secure financial funds such as short-term deposits. The Company uses derivatives to hedge risks stated below, and do notintend to use them for speculative purpose.

Trade notes and accounts receivable which are operating receivables are exposed toconsumer credit risk. Therefore, the Companies manage due dates and balance for eachcustomer, and make efforts to early recognize concerns about collectability and reduce itsrisks due to deterioration in financial conditions, etc.Investment securities consisting mainly of shares of companies with which the Companyhas business relationship are managed by grasping fair values and financial conditions ofissuers on a regular basis.Payment due dates of most trade notes and accounts payable which are operatingpayables are within one year.The Company uses borrowings and convertible bond with stock acquisition rights mainlyfor the purpose of procuring funds necessary for capital investment. As long-term loanswith floating interest rate are exposed to the risk of interest-rate fluctuations, theCompany uses derivative transactions (interest-rate swaps) to hedge the risk.Operating receivables in foreign currency which arise from the Company’s global businessdevelopment are exposed to the risk of exchange-rate fluctuations. The Company usesforward exchange contracts as hedging instruments for operating receivables in foreigncurrency to reduce the risk of exchange-rate fluctuations, in principle. The Company alsomakes forward exchange contracts to hedge risks from operating receivables in foreigncurrency which are surely brought about by forecasted transactions related to exports.The Company makes derivatives transactions only with high-rated financial institutions.In accordance with the internal risk management regulations providing for trading authority,the ceiling and other matters, the finance and accounting department executes derivativetransactions, and manage them by recording details of transactions and checking balanceswith counterparties.A manager of finance and accounting department reports monthly results of transactionsto Managing Officers of Management & Administration Headquarters, and they report theresults to the Board of Directors. Consolidated subsidiaries and affiliate do not usederivatives.The Company unifies the management of funds of the entire Group based on funding plansprepared by each group company in order to allow them to secure adequate liquidity.

Effective from the year ended March 31, 2010, the Company adopted the revisedAccounting Standard, "Accounting Standard for Financial Instruments" (ASBJStatement No.10, revised on March 10, 2008) and the "Guidance on Disclosures aboutFair Value of Financial Instruments" (ASBJ Guidance No.19, issued on March 10, 2008).

(2) Fair values of financial instruments

Book value Fair value Difference

(1) Cash, cash equivalents and time deposits \39,958 \39,958 –(2) Trade notes and accounts receivable 41,191 41,191 –(3) Investment securities: 1) Held-to-maturity debt securities 1 1 – 2) Available-for-sale securities 3,811 3,811 –

Total assets \84,961 \84,961 –

(4) Trade notes and accounts payable 17,048 17,048 –(5) Short-term borrowings 2,997 2,997 –(6) Other accounts payable 10,289 10,289 –(7) Income taxes payable 1,120 1,120 –(8) Convertible bonds with stock acquisition rights 20,000 19,754 \(246)(9) Long-term borrowings (*1) 22,010 22,150 140

Total liabilities \73,464 \73,358 \(106)

(10) Derivative transactions (*2) \(181) \(181) –


(1) Cash, cash equivalents and time deposits \41,785 \41,785 –(2) Trade notes and accounts receivable 48,698 48,698 –(3) Investment securities: 1) Held-to-maturity debt securities 2 2 – 2) Available-for-sale securities 4,256 4,256 –

Total assets \94,741 \94,741 –

(4) Trade notes and accounts payable 18,544 18,544 –(5) Short-term borrowings 5,868 5,868 –(6) Other accounts payable 3,556 3,556 –(7) Income taxes payable 1,565 1,565 –(8) Convertible bonds with stock acquisition rights 20,000 19,766 \(234)(9) Long-term borrowings (*1) 26,072 26,260 188

Total liabilities \75,605 \75,559 \(46)

(10) Derivative transactions (*2) \(463) \(463) –


(1) Cash, cash equivalents and time deposits $481,417 $481,417 –(2) Trade notes and accounts receivable 496,274 496,274 –(3) Investment securities: 1) Held-to-maturity debt securities 7 7 – 2) Available-for-sale securities 45,924 45,924 –

Total assets $1,023,622 $1,023,622 –

(4) Trade notes and accounts payable 205,397 205,397 –(5) Short-term borrowings 36,105 36,105 –(6) Other accounts payable 123,959 123,959 –(7) Income taxes payable 13,500 13,500 –(8) Convertible bonds with stock acquisition rights 240,964 238,000 $(2,964)(9) Long-term borrowings (*1) 265,174 266,871 1,697

Total liabilities $885,099 $883,832 $(1,267)

(10) Derivative transactions (*2) $(2,180) $(2,180) –

net liabilities.

Book values and fair values of the financial instruments on the consolidated balance sheets at March 31, 2011and 2010 are as follows;. When it is extremely difficult to measure a fair value of financial instrument, such afinancial instrument is not included in the table shown below.

(*2) Derivatives transactions are stated in net of assets and liabilities. The figures in parenthesis indicate

Millions of yen

Thousands of U.S. dollars

(*1) Long-term borrowings includes current portion.

Millions of yen

2011

2010

2011

Assets:

(3) Investment securities

Liabilities:

(9) Long-term borrowings

(10) Derivative transactions

Thousands ofU.S. dollars

2011 2010 2011

Classification Book value Book value Book value

Available-for-sale securities

Unlisted equity securities \77 \312 $927

Investments in affiliate 528 529 6,365

Equities of limited liability partnerships forinvestment business and of other similarpartnerships

260 159 3,128

Since these are settled in short term, their fair values are close to book values. Accordingly, they arestated at book value.

The price offered by correspondent financial institutions is regarded as fair value.

The fair values of long-term borrowings are measured as present values obtained by discounting totalamount of principal and interest at the estimated interest rate if similar borrowings were newly made. Long-term borrowings with floating interest rates are subject to the preferential accounting method for interest-rate swaps. Their fair values are calculated by discounting the total amount of principal and interest treatedtogether with relevant interest-rate swaps at the estimated interest rate if similar borrowings were newlymade.

(8) Convertible bonds with stock acquisition rights

Note 1:Measurement methods for fair value of financial instruments and matters concerning securities andderivative transactions

Since these are settled in short term, their fair values are close to book values. Accordingly, they arestated at book value.

Equity securities are stated at price on exchange market, and bonds are stated at price offered bycorrespondent financial institutions.

(4) Trade notes and accounts payable, (5) Short-term borrowings, (6) Other accounts payable and(7) Income taxes payable

(1) Cash, cash equivalents and time deposits and (2) Trade notes and accounts receivable

Note 2: Financial instruments of which fair value is extremely difficult to be identified

As derivative transactions subject to the preferential accounting method for interest-rate swaps aretreated together with hedged long-term borrowings, their fair values are included in the fair values ofrelevant long-term borrowings.

The fair values of forward exchange contracts are stated at prices offered by financial institutions.

Millions of yen

Within 1year

Over 1yearand

within 5Cash, cash equivalents and time deposits \39,923 -Trade notes and accounts receivable 41,191 -Investment securities Held-to-maturity debt securities - \1

Within 1year

Over 1yearand

within 5Cash, cash equivalents and time deposits \41,785 -Trade notes and accounts receivable 48,698 -Investment securities Held-to-maturity debt securities - \2

Within 1year

Over 1yearand

within 5Cash, cash equivalents and time deposits $480,996 -Trade notes and accounts receivable 496,274 -Investment securities Held-to-maturity debt securities - $7

Millions of yen

Thousands of U.S. dollars 2011

2010

Millions of yen

As for financial instruments shown above, there is no market price and future cash flow cannot beestimated. Accordingly, since it is considered very difficult to identify their fair value, they are notincluded in "Assets (3) 2) Available-for-sale securities".

Note3: Planned redemption amounts after March 31, 2011 and 2010 for monetary assets and investmentsecurities

2011

5. DEBT AND EQUITY SECURITIES

(1) Held-to-maturity debt securities

Securities for which book value of Book value Fair valueUnrealizedGain/loss

consolidated balance sheets exceeds acquisition cost Government and municipal bond - - - Corporate bonds - - - Other - - - Subtotal - - - Securities for which book value of consolidated balance sheets does not exceed acquisition cost Government and municipal bond - - - Corporate bonds - - - Other \1 \1 - Subtotal \1 \1 -


consolidated balance sheets exceeds acquisition cost Government and municipal bond - - - Corporate bonds - - - Other - - - Subtotal - - - Securities for which book value of consolidated balance sheets does not exceed acquisition cost Government and municipal bond - - - Corporate bonds - - - Other \2 \2 - Subtotal \2 \2 -


consolidated balance sheets exceeds acquisition cost Government and municipal bond - - - Corporate bonds - - - Other - - - Subtotal - - - Securities for which book value of consolidated balance sheets does not exceed acquisition cost Government and municipal bond - - - Corporate bonds - - - Other $7 $7 - Subtotal $7 $7 -

Millions of Yen

Millions of Yen


2011

2010

2011

(2) Available-for-sale securities

Book value Acquisition costUnrealizedGain/loss

Securities for which book value of consolidated balance sheets exceeds acquisition cost Stock \2,723 \1,852 \871 Corporate bonds - - - Other - - - Subtotal \2,723 \1,852 \871Securities for which book value of consolidated balance sheets does not exceed acquisition cost Stock \1,054 \1,433 \(379) Corporate bonds - - - Other 34 42 (8) Subtotal \1,088 \1,475 \(387) Total \3,811 \3,327 \484


Securities for which book value of consolidated balance sheets exceeds acquisition cost Stock \3,581 \2,434 \1,147 Corporate bonds - - - Other - - - Subtotal \3,581 \2,434 \1,147Securities for which book value of consolidated balance sheets does not exceed acquisition cost Stock \638 \873 \(235) Corporate bonds - - - Other 37 42 (5) Subtotal \675 \915 \(240) Total \4,256 \3,349 \907


Securities for which book value of consolidated balance sheets exceeds acquisition cost Stock $32,808 $22,314 $10,494 Corporate bonds - - - Other - - - Subtotal $32,808 $22,314 $10,494Securities for which book value of consolidated balance sheets does not exceed acquisition cost Stock $12,697 $17,268 $(4,571) Corporate bonds - - - Other 419 509 (90) Subtotal $13,116 $17,777 $(4,661) Total $45,924 $40,091 $5,833

2011

2010

2011


Millions of Yen

Millions of Yen

6. INDEBTEDNESS

Short-term borrowing at March 31, 2011 and 2010 principally consist of borrowings from banks at average annual rates of approximately 0.88% and 0.94%, respectively.

Long-term debts at March 31, 2011 and 2010 consisted of the following:

Thousands of

U.S. Dollars 2011 2010 2011

Long-term borrowings from banks and other financial institutions

\12,540 \4,061 $151,082

9,470 22,011 114,092 Euro Yen zero coupon convertible bonds due 2014 20,000 20,000 240,964 Lease liabilities Due within one year Lease that deem to transfer ownership to lessee, weighted average interest rate 3.22% Lease that do not transfer ownership to lessee 579 615 6,979 Due after one year Lease that deem to transfer ownership to lessee weighted average interest rate 3.22% Lease that do not transfer ownership to lessee 1,319 1,766 15,895 Total 44,927 49,792 541,287 Less current portion (13,447) (4,995) (162,015) Long-term debts, less current portion \31,480 \44,797 $379,272

The average interest rate per annum for lease that do not transfer ownership to lessee is not presented since lease liabilities are stated at the amounts before deducting interest portion which is included in total lease liabilities.

The conversion price per share of Euro Yen zero coupon convertible bonds for the years ended March 31, 2011 and 2010 was \3,746 ($45.13) - fixed price.

The aggregate annual maturities of long-term borrowings other than lease liabilities as of March 31, 2011 are as follows:

Thousands of For the year ending March 31 U.S. Dollars

2012 $151,0822013 43,9732014 36,501 2015 270,838 2016 350 2017 and thereafter 3,394

Total $506,138

The annual maturities of lease liabilities as of March 31, 2011 are as follows:

Thousands of For the year ending March 31 U.S. Dollars

2012 $10,9332013 7,7682014 6,939 2015 2,628 2016 2,597 2017 and thereafter 4,284

Total $35,149

\907

3,954319 328

8,3211,020 691

Millions of Yen

Millions of Yen

281

3,6503,030

22,480

\12,540

29

Due within one year, weighted average interest rate 1.56% at March 31, 2011, and 1.45% at March 31, 2010.

Due after one year, weighted average interest rate 1.58% at March 31, 2011, and 1.56% at March 31, 2010.

355 \2,917

\42,010

645576 218 216

Millions of Yen

7. RETIREMENT BENEFITS

(1) Outline of retirement benefit plans The Company and certain domestic subsidiaries have defined contribution pension plans, prepaid retirement plans, and lump-sum retirement benefit plans. Certain foreign subsidiaries mainly adopted lump-sum retirement benefit plans.

(2) The liability (asset) for retirement benefit plans for the years ended March 31, 2011 and 2010 were as follows:Thousands of U.S. Dollars

2011 2010 2011

Projected benefits obligation \4,741 \4,687 $57,124 Unrecognized actuarial differences 168 212 2,028 Fair value of pension assets 1,223 1,256 14,731 Net liability for severance and retirement benefits 3,350 3,219 40,365 Prepaid pension costs 50 43 599 Accrued retirement benefits for employees \3,400 \3,262 $40,964

(3) Retirement benefit costs for the years ended March 31, 2011 and 2010 were as follows:Thousands of U.S. Dollars

2011 2010 2011

Service cost \569 \457 $6,854 Interest cost 176 132 2,117 Expected return on plan assets (58) (55) (702) Other 1,006 989 12,123 Net periodic benefit costs \1,693 \1,523 $20,392

Retirement benefit costs incurred by the domestic consolidated subsidiaries that adopted the simplification method or benefit formula were recorded as service cost. "Other" for the years ended March 31, 2011 and 2010 mainly includes contribution to defined contribution pension plans.

The discount rates of domestic and foreign companies were 2.00% and from 5.00% to 8.11% respectively for the year ended March 31, 2011. The rates of expected return on plan assets of domestic and foreign companies are 1.25% and from 5.00% to 6.00% respectively for the year ended March 31, 2011. The estimated amounts of all retirement benefits to be paid at the future retirement dates are allocated to each service year using the benefit formula or equally using the estimated number of total service years. Unrecognized actuarial differences of domestic subsidiaries are amortized, using the straight-line method over 13 to 15 years, which is shorter than the average remaining years of service of the employees, commencing the following year in which the differences are recognized. Consolidated overseas subsidiaries have adopted the corridor approach for the amortization of actuarial differences.

8. NET ASSETS

Under the Companies Act of Japan ("the Act") , in cases where dividend distribution of surplus is made, the lesser of an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve, must be set aside as additional paid-in capital or legal earnings reserve. Additional paid-in capital and legal earnings reserve is included in capital surplus and retained earnings, respectively, in the accompanying consolidated balance sheets. Under the Act, all additional paid-in capital and legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with the Act. Appropriations are not accrued in the consolidated financial statements for the corresponding period, but are recorded in the subsequent accounting period after shareholders’ approval has been obtained.

Millions of Yen

Millions of Yen

9. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS

Summary of net assets (liabilities) and net payment for the acquisition of shares of companies newly included during the year ended March 31, 2010 is as follows:

TAIYO YUDEN Mobile Technology Co., Ltd. and

TAIYO YUDEN Mobile Technology Products Co., Ltd. Millions of Yen

Current assets \6,233

Non-current assets 1,350

Goodwill 3,003

Current liabilities (5,038)

Non-current liabilities (2,023)

Negative goodwill (3)

Acquisition cost 3,522

Cash and cash equivalents of acquired companies (733)

Payment for acquisition of investments in acquired companies \(2,789)

10. INCOME TAXES

Income taxes in Japan applicable to the Company and domestic subsidiaries for the years ended March 31,2011 and 2010 were comprised of (1) a corporation tax at the rates of 30.0% on taxable income, (2) enterprisetax of approximately 7% on taxable income and (3) prefectural and residence taxes of approximately 21% of theamount of the corporation tax. Enterprise tax is deductible for income tax purposes when paid.Income taxes of foreign subsidiaries are generally based on tax rates applicable in the country of incorporation.

Significant components of the deferred tax assets and liabilities as of March 31, 2011 and 2010were as follows:


2011 2010 2011Deferred tax assets Inventories \263 \144 $3,174 Retirement benefits 3,513 3,166 42,321 Enterprise tax payables 69 85 835 Accrued bonuses 935 916 11,264 Excess depreciation 2,657 222 32,006 　　Allowance for doubtful receivables 393 – 4,739 Net operating loss 11,224 8,267 135,234 Other 2,177 2,281 26,231 Offset (1,811) (1,250) (21,820) Subtotal 19,420 13,831 233,984 Valuation allowance (14,020) (8,459) (168,918)Total deferred tax assets \5,400 \5,372 $65,066

Deferred tax liabilities Allowance for doubtful receivables \33 \25 $395 Undistributed earnings of foreign subsidiaries 1,874 1,888 22,584 Inventories 448 517 5,400 Reserves 1,062 1,145 12,801 Unrealized holding gains on investment securities 93 - 1,120 Other 1,086 550 13,084 Offset (1,811) (1,250) (21,820) Total deferred tax liabilities \2,785 \2,875 $33,564

Reconciliation of the normal income tax rates to the effective income tax rates was as follows:

2010Statutory tax rate 40.4 %Differences in statutory tax rates of consolidated subsidiaries (297.3)Undistributed earnings of foreign subsidiaries (31.1)Impact of consolidation elimination of dividends from foreign subsidiaries 157.1Foreign tax 71.3Valuation allowance 203.9

Unrealized profit on inventory 87.4

Amortization of goodwill 21.1Residence tax on per capita basis 6.0Other (1.9)Effective income tax rate 256.9 %

Reconciliation of statutory and effective income tax rates for 2011 is omitted because of loss before incometaxes and minority interests.

Millions of Yen

11. LEASE TRANSACTIONS

(1) Finance Lease

As described in Note 2, finance lease contracts commencing after April 1, 2008 are capitalized. Information of finance lease contracts commencing prior to March 31, 2008, which are accounted for in the same manner as operating leases, was as follows:

The amounts corresponding to acquisition cost, accumulated depreciation, and net book value at March 31, 2011 and 2010 were as follows:

Thousands of Millions of Yen U.S. Dollars

2011 2010 2011

The amount corresponding to acquisition cost \1,660 \2,016 $20,002 The amount corresponding to accumulated depreciation 1,350 1,364 16,264 The amount corresponding to net book value \310 \652 $3,738

The amounts of outstanding future lease payments due at March 31, 2011 and 2010 were as follows:


2011 2010 2011 Future lease payments Within one year \229 \337 $2,755 Over one year 81 315 983

Total \310 \652 $3,738

Lease payments and the amounts corresponding to depreciation for the years ended March 31, 2011 and 2010 were summarized as follows:


2011 2010 2011

Lease payments \333 \432 $4,013 The amount corresponding to depreciation expense 333 432 4,013

The imputed interest expense portion is included in the above future lease payments under finance leases.

The amount corresponding to depreciation expense was calculated by the straight-line method over the lease term with no residual value.

(2) Operating leaseThe amounts of noncancellable future lease payments, including the interest portion, as of March 31, 2011 and 2010

are as follows:


2011 2010 2011 Future lease payments Within one year \190 \190 $2,288 Over one year 570 760 6,865

Total \760 \950 $9,153

12. IMPAIRMENT LOSS ON PROPERTY, PLANT AND EQUIPMENT

The Companies categorize their business assets by segmentation for management accounting, and idle assets by individual asset. Property, plant and equipment such as head office and laboratories are categorized as common assets.

For the idle assets with no specific utilization plan or low profitability, their book values have been written down to the memorandum value and such reduction was recorded as impairment loss on property, plant and equipment.

For the recording media products production facilities etc., the Companies assessed the recoverability of those assets in the implementation of structure reform due to harsh　business environment.

As the results, their book values have been　written down to the recoverable amount　and such reduction was recorded as impairment loss on property, plant and equipment.

The recoverable amount was determined through measurement of the value in use, which is calculated by discounting expected future cash flows at capital cost before tax (14.3%).

For the telephone subscription rights, the market prices have significantly declined from the book values and there seem to be no possibility of recovery. Thus their book values have been written down to the memorandum value and such reduction was recorded as impairment loss.

For the years ended March 31, 2011 and 2010, the Companies recognized impairment loss on property, plant and equipment as follows:

For the year ended March 31, 2011

Millions of Thousands ofClassification Description Location Yen U.S. Dollars

Machinery and Equipment, Recording media products Date, Fukushima \7,035 $84,763Buildings and Land, Other production facilities, Others

Idle asset Haruna, Gunma 300 3,615 Nakanojo, GunmaTamamura, GunmaYawatabara, GunmaTianjin, China

Intangible assets Telephone subscription Shinyokohama, Kanagawa 8 96right Suzaka, Nagano


Millions of Classification Description Location Yen

Buildings Idle asset Haruna, Gunma \18Mito, IbarakiOther

Idle asset Haruna, Gunma 161Nakanojo, GunmaTamamura, GunmaYawatabara, Gunma TRDA, California, USAOther

Other Idle asset Yawatabara, Gunma 2Mito, IbarakiOther

Machinery and Equipment,Tools, Furniture andFixtures, Other

Machinery and Equipment

13. CONTINGENT LIABILITIES

At March 31, 2011 and 2010, the Companies had the following contingent liabilities:


As guarantor of bank loans and indebtedness

14. DERIVATIVE TRANSACTIONS

The fair values of derivatives held by the Companies as of March 31, 2011 and 2010 are summarized

as follows. Fair value is computed based on quotes and others by financial institutions and others.

(1) Derivative transactions for which hedge accounting is not applied

Millions of Yen 2011

\6 \8 $66

2011 2010

Fair valueContract amountUnrealized gain

(loss)

\12

Millions of Yen

\16,927 - \(109)

\1,651 -

Due afterone year

Foreign exchangeforward contracts:Selling: U.S. Dollar

\(109)

Millions of Yen



Foreign exchangeforward contracts:Buying: U.S. Dollar

\12

Contract amountDue afterone year

\11,140


$203,944 - $(1,315)


$19,892 - $142

- \(301)

Fair value

$(1,315)

Unrealized gain(loss)

2011

2010

2011

Fair valueUnrealized gain

(loss)

\(301)

$142


(2) Derivative transactions for which hedge accounting is applied

For the specific treatment of interest-rate swaps, because they are account for in combinationwith the hedged long-term borrowings, their fair value is included the fair value of the long-term borrowings.

$313


Futuretransaction

\1,637 -


Futuretransaction

$19,718 -

$(1,320)

Interest-rate swapsFixed interestpayment and floatinginterest receipt

Long-termborrowings

$72,289 $36,145 -


Futuretransaction

$78,740 -

-

Contract amount

\6,000 Long-termborrowings

\3,000

\26

Fair valueDue afterone year


Fair valueContract amountDue afterone year

Thousands of U.S. Dollars2011


Futuretransaction

\6,535 -

\(162)

Millions of Yen 2010

Millions of Yen

\(110)


Fair value


Futuretransaction

\5,696 -

-


Long-termborrowings

\7,000 \7,000

2011

15. STOCK OPTION PLAN

The Company grants stock options to its directors in line with resolutions of the board of directors meetings.

Expenses for stock options amounting to \40 million ($476 thousand) and \35 million were recognized in selling, general and administrative expenses in 2011 and 2010, respectively.

For the years ended March 31, 2011 and 2010, a standard option pricing model (i.e., Black-Scholes) was used to measure the fair value of stock options granted to its directors. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with risk-free interest rates of 0.42% in 2011 and 0.48% in 2010, dividends per share of \10 ($0.12) in both years and volatility factor of the expected market value of the Company's common stock of 46.5% in 2011 and 55.0% in 2010, determined by weekly historical price for the past five years and seven months and expected life of the option of 5.6 years in 2011 and weekly historical prices for the past two years and seven months and a expected life of the option of 2.6 years in 2010.

A summary of the Company's stock options outstanding at March 31, 2011 is as follows:

Date of resolution

Date of grant

Number of options

Exercise price

Exercise period

Fair value (per share)Options outstanding at March 31, 2009 16,000 shares 29,000 shares 32,000 shares 46,000 shares

Granted - - - -

Exercised 8,000 12,000 9,000 12,000

Forfeited/Expired - - - -Options outstanding at March 31, 2010 8,000 17,000 23,000 34,000Granted - - - -

Exercised - - - -

Forfeited/Expired - - - -

Options outstanding at March 31, 2011 8,000 shares 17,000 shares 23,000 shares 34,000 shares

Date of resolution

Date of grant

Number of options

Exercise price

Exercise period

Fair value (per share)

Options outstanding at March 31, 2009 46,000 shares - -Granted - 37,000 shares -Exercised 12,000 3,000 -Forfeited/Expired - - -Options outstanding at March 31, 2010 34,000 34,000 -Granted - - 39,000 sharesExercised - - -Forfeited/Expired - - -

Options outstanding at March 31, 2011 34,000 shares 34,000 shares 39,000 shares

From June 10, 2009to June 9, 2029

\947

May 25, 2009

June 9, 2009

37,000 shares ofCommon stock

\1

June 29, 2005

June 29, 2005

From July 14, 2007to July 13, 2027

\1

June 28, 2007

July 13, 200732,000 shares ofCommon stock

June 29, 2006

August 23, 200629,000 shares ofCommon stock

\1,511 \2,761

\1From August 24, 2006

to August 23, 2026\ -

From June 30, 2005to July 31, 2025

\966


\1



July 13, 2007

June 28, 2007

\2,761


\1\1



\1,013 ($12.20)

June 29, 2010

July 21, 2010


\1 ($0.01)

July 14, 2008

June 27, 2008

16. COMPREHENSIVE INCOME

Other comprehensive income for the year ended March 31, 2010 was as follows:

Millions of Yen2010

Other comprehensive income:Net unrealized holding gains on securities \1,246Deferred losses on hedges (89)Foreign currency translation adjustments 502

Total other comprehensive income \1,659

Total comprehensive income for the year ended March 31, 2010 was as follows:

Millions of Yen2010

Total comprehensive income attributable to:Owners of the parent \978Minority interests 9

Total comprehensive income \987

17. LOSS ON (EARTHQUAKE) DISASTER

Loss on (earthquake) disaster for the year ended March 31, 2011 consists of the following:

Millions of YenThousands ofU.S. dollars

2011 2011Loss on disposal of property, plant and

equipment due to disaster \850 $10,234Loss on disposal of inventories due to

disaster 241 2,909Fixed costs during shutdown of facilities

due to disaster 183 2,204Repair costs for disaster-affected assets 85 1,021Other 51 614Total \1,410 $16,982

18. SEGMENT INFORMATION

For the years ended March 31, 2011 and 2010Effective from the fiscal year ended March 31, 2011, the Companies adopted the "Accounting Standard forDisclosures about Segments of an Enterprise and Related Information" (ASBJ Statement No. 17, issued on March 27, 2009) and the "Guidance on　the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information" (ASBJ Guidance No. 20, issued on March 21, 2008).

(a) General information about reportable segments

The Companies’ reportable segments are those for which separately financial information is available and regular evaluation by the Company’s Boardof Directors is being performed in order to decide how resources are allocated among the Companies.The Companies consist of its business divisions, identified by the nature of the business, which are two segments of "Electronic Components" and"Optical media and others"."Electronic Components" consists of "Capacitors", "Ferrite and Application Products", "Modules", and "Other Electronic Components"."Optical media and others" mainly provides recording-media products and implementation business of subsidiaries.

(b) Basis of measurement about reported segment profit or loss, segment assets and other material items

The accounting policies of each reportable segment are consistent to those disclosed in Note 2. "Summary of significant accounting policies".Income by reportable segments is based on operating income. Liabilities are not disclosed because they are not provided to the highest decision-makingbody periodically.

(c) Information about reported segment profit or loss, segment assets, segment liabilities and other material items

ElectronicComponents

Opticalmedia and

others Adjustments Total Sales: Sales to external customers \179,870 \30,532 - \210,402 Intersegment sales or transfers - - - -

Total sales 179,870 30,532 - 210,402 Segment profit (loss) \12,279 \(3,487) - \8,792 Segment assets \155,391 \13,461 \52,421 \221,273 Other items: Depreciation and amortization \16,536 \2,774 - \19,310 Increase in property, plant and equipment and intangible assets 23,593 1,481 - 25,074


Opticalmedia and

others Adjustments Total Sales: Sales to external customers \160,787 \34,904 - \195,691 Intersegment sales or transfers - - - -

Total sales 160,787 34,904 - 195,691 Segment profit (loss) 7,895 (3,691) - 4,204 Segment assets \152,831 \29,215 \54,316 \236,362 Other items: Depreciation and amortization \17,556 \6,366 - \23,922 Increase in property, plant and equipment and intangible assets 6,573 2,846 - 9,419


Opticalmedia and

others Adjustments Total Sales: Sales to external customers $2,167,106 $367,856 - $2,534,962 Intersegment sales or transfers - - - -

Total sales 2,167,106 367,856 2,534,962 Segment profit (loss) 147,942 (42,010) - 105,932 Segment assets $1,872,184 $162,180 $631,572 $2,665,936 Other items: Depreciation and amortization $199,231 $33,419 - $232,650 Increase in property, plant and equipment and intangible assets 284,256 17,845 - 302,101

2011

Millions of Yen

Millions of Yen


2011

2010

(d) Related information 1. Information about geographical areas (i) Sales

Japan China South Korea Other areas Total\48,241 \56,935 \29,942 \75,284 \210,402

Japan China South Korea Other areas Total Sales $581,220 $685,961 $360,751 $907,030 $2,534,962

(ii) Property, plant and equipment

Japan Malaysia Other areas Total Property, plant and equipment \56,439 \10,229 \20,935 \87,603

Japan Malaysia Other areas Total Property, plant and equipment $679,993 $123,236 $252,225 $1,055,454

(e) Information about impairment loss by reportable segments


Optical mediaand others Adjustments Total

Impairment loss \289 \7,054 - \7,343



Impairment loss \161 \20 - \181



Impairment loss $3,489 $84,985 - $88,474

(f) Information about amortization and the balance of (negative) goodwill by reportable segments



(Goodwill)Amortization \844 - - \844Balance \2,646 - - \2,646

(Negative goodwill)Amortization - \21 - \21Balance - \52 - \52



(Goodwill)Amortization $10,173 - - $10,173Balance $31,881 - - $31,881

(Negative goodwill)Amortization - $250 - $250Balance - $624 - $624

Millions of Yen

Millions of Yen


Millions of Yen


2011

2011

2011

2011

Millions of Yen2011

Thousands of U.S. dollars2011

2011

2010

2011Thousands of U.S. dollars

Millions of Yen

19. NET LOSS PER SHARE

Reconciliation of the basic net loss per share ("EPS") for the years ended March 31, 2011 and 2010 were as follows:

Millions of Thousands of

Yen Shares Yen U.S. Dollars

Net Weighted

Loss Average Shares


Basic EPS Net loss allocated to common shareholders \(5,506) 117,600 \(46.82) $(0.56)

Although diluted shares exist for the year ended March 31, 2011, diluted net income per share is not calculated since there is net loss per share for the period.


Basic EPS Net loss allocated to common shareholders \(680) 117,606 \(5.78)

Although diluted shares exist for the year ended March 31, 2010, diluted net income per share is not calculated since there is net loss per share for the period.

20. SUBSEQUENT EVENT

The following appropriations of retained earnings at March 31, 2011 were approved at the Company's shareholders' meeting held on June 29, 2011:

Thousands of　　Millions of Yen U.S. Dollars

Cash dividend, \5.00 ($0.06) per share \588 $7,084

EPS

SUBSIDIARIES and AFFILIATE

SUBSIDIARIES

Domestic (Japan) Ownership

Taiyo Chemical Industry Co., Ltd. 100.0%Tsukiyono Denshi Co., Ltd. 100.0%Akagi Electronics Co., Ltd. 100.0%Sun Vertex Co., Ltd. 100.0%That's Fukushima Co., Ltd. 100.0%Kankyo Assist Co., Ltd. 100.0%Bifrostec Inc. 57.1%Niigata Taiyo Yuden Co., Ltd. 100.0%TAIYO YUDEN ENERGY DEVICE CO., LTD. 100.0%Chuki Seiki Co., Ltd. 88.1%Victor Advanced Media Co., Ltd. 65.0%TAIYO YUDEN Mobile Technology Co., Ltd. 100.0%TAIYO YUDEN Mobile Technology Products Co., Ltd. 100.0%

Overseas Ownership

TAIWAN TAIYO YUDEN CO., LTD. 100.0%KOREA TAIYO YUDEN CO., LTD. 100.0%TAIYO YUDEN (SINGAPORE) PTE. LTD 100.0%HONG KONG TAIYO YUDEN CO., LTD. 100.0%TAIYO YUDEN (U.S.A.) INC. 100.0%TAIYO YUDEN EUROPE GmbH 100.0%KOREA TONG YANG YUJUN CO., LTD. 100.0%TAIYO YUDEN (PHILIPPINES) INC. 100.0%TAIYO YUDEN ENTERPRISES COMPANY LIMITED 100.0%DONGGUAN TAIYO YUDEN CO., LTD. 100.0%TAIYO YUDEN (SARAWAK) SDN. BHD. 100.0%TAIYO YUDEN (MALAYSIA) SDN. BHD. 53.3%TAIYO YUDEN (GUANGDONG) CO., LTD. 100.0%KOREA KYONG NAM TAIYO YUDEN CO., LTD. 100.0%TAIYO YUDEN (SHANGHAI) TRADING CO., LTD. 100.0%TAIYO YUDEN (TIANJIN) ELECTRONICS CO., LTD. 100.0%TAIYO YUDEN (SHENZHEN) ELECTRONICS TRADING CO., LTD. 100.0%TAIYO YUDEN (CHINA) CO., LTD. 100.0%TAIYO YUDEN (SUZHOU) CO., LTD. 100.0%JVC ADVANCED MEDIA U.S.A. INC. 65.0%JVC Advanced Media EUROPE GmbH 65.0%JVC Advanced Media (Tianjin) Co., Ltd. 65.0%

AFFILIATE

Domestic (Japan) Ownership

START Lab Inc. 49.9%

t a i y o y u d e n co., ltd. and subsidiariespdf.irpocket.com/c6976/argx/vcqa/tv9r.pdf · t a i y...

Documents