Hogy Fy2012 Ar

For the Year ended March 31, 2012
Toward Another 50 Years, Pursue Further Enhancement of Corporate Value

Guided by the corporate credo of fostering medical progress and promoting the health and happiness of people through its business activities, thus contributing to social prosperity, Hogy Medical provides products and systems that contribute to the safety of patients and medical staff as well as the streamlining and laborsaving efforts in the management of medical institutions. Hogy Medical was established in 1961 by founder Masao Hoki and was at first named Hoki Recording Paper Marketing Co., Ltd. Since that time, we have continued to lead the industry with the provision of innovative products for half a century and have grown by developing and supplying products that contribute to the safety of patients and medical staff and the streamlining of the management of medical institutions. Especially notable is Mekkin Bag, developed and released in 1964 as the first step in the prevention of in-hospital infections, which has grown to become the representative product for sterilization bags. This was followed by the development of the major product DuPont Sontara, a non-woven fabric medical product that has generated a revolution on the medical front lines due to its significant contribution to prevention of in-hospital infections. Today, we have established a position as the leading company in Japans disposable medical equipment market. The Hogy Medical Group directly conducts proposal-based marketing to medical institutions and responds meticulously to the voices of people on the medical front. Demand for our medical kit products is rapidly growing, reflecting the needs of customers. In these kits, the quantity of medical supplies is set in accordance with the requirements of specific medical functions, such as surgery and medical check-ups. Since their release, the kits have captured the attention of medical institutions, such as from the perspective of reducing their burden of work, preventing errors in organization of medical supplies, preventing in-hospital infections and other aspects of risk management. Over the medium to long term, the Hogy Medical Group will continue to use the Tsukuba Plant, which features unparalleled safety standards, to spearhead a strategy focused on Opera Master, which contributes to medical safety and improved management of medical institutions.
CONTENTS
Financial Highlights (Consolidated) To Our Shareholders and Investors Corporate Governance and Internal Control System Summary of Business by Mainstay Product Five-Year Financial Data Overview (Consolidated) Financial Review (Consolidated) 1 2 8 10 16 17 Key Financial Data (Consolidated) Consolidated Financial Statements History Shareholder Information Corporate Information Network 18 20 36 37 38 39
Financial Highlights (Consolidated)
Years ended March 31,
2012
2011
2012
(Thousands of U.S. dollars)
Income Statement Data Net sales Operating income Income before income taxes and minority interests Net income Balance Sheet Data Common stock Additional paid-in capital Net assets Total assets Property, plant and equipment, net Cash Flow Data Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities Cash and cash equivalents at end of year Per Share Data Net income (basic) Net income (diluted) Net assets
(Millions of yen unless indicated otherwise)
31,873 7,750 7,822 4,624
31,311 8,601 7,475 4,453
388,044 94,352 95,232 56,303
7,123 8,336 64,013 72,522 29,585
7,123 8,336 60,698 69,834 31,518
86,721 101,486 779,321 882,910 360,180
6,278 (2,810) (2,310) 19,239

(yen)
7,250 (3,888) (2,545) 18,139
76,436 (34,219) (28,123) 234,231

(U.S. dollars)
294.01 4,069.17
283.10 3,857.83
3.58 49.54
Notes: (1) The U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of 82.14 = U.S.$1.00, the rate of exchange on March 31, 2012. (2) This annual report states all figures on a consolidated basis, except where otherwise noted.
Operating Results
(Unit: Millions of yen/consolidated)
35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Net sales Ordinary income
*This annual report states all figures on a consolidated basis from FY1995.
62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Forward-looking Statements The plans, strategies and performance forecasts in this annual report are forward-looking statements and include risks and uncertainties. Please recognize that various factors may lead to actual results differing from the forecasted figures.
(as of March 31, 2012)
To Our Shareholders and Investors
A New Start for the Next 50 Years Under the Corporate Policy of Tireless Challenge Aimed at Dramatic Progress
In fiscal 2011 ended March 31, 2012, the Japanese economy showed a recovery trend, albeit moderate, despite the major impact of the Great East Japan Earthquake. However, the outlook still remained unclear due in part to the European financial crisis and sharp foreign exchange fluctuations, soaring crude oil prices and other factors. In the medical equipment industry, despite a slight increase in overall medical treatment remuneration, Japans difficult financial position was among the factors that continued to cause companies associated with the industry to face growing pressure to enhance the efficiency of and streamline management. In this environment, the Hogy Medical Group sustained damage to production facilities from the Great East Japan Earthquake, which affected business results in the first quarter of the fiscal year. However, we gradually stepped up marketing activities, spurred by promotional tours of the Surgery Management System showroom, which extends the functions of the Opera Master system components. Accordingly, we were able to conclude contracts on a par with previous years. As a result, consolidated net sales for fiscal 2011 were up 1.8% from the previous fiscal year, to 31,873 million. Within this total, sales of surgical-use medical kit products were up 5.9%, to 15,232 million, owing mainly to the popularity of Opera Master, a solution-based service for medical institutions incorporating products, logistics and information management. During fiscal 2011,
Fiscal 2011 Sales Growth by Major Products

(Unit: Millions of yen, rounded down) 1,000 852 Kit total 800 600 400 200
0
Fiscal 2011 sales growth 562 million
880
Opera Master
132 24 Regular kit -28 Non-woven fabrics Mekkin Bag -222 -234 Other non-woven fabrics Other products 10 Subsidiaries and other sales
-200 -400
2012 ANNUAL REPORT
although the Group signed 20 Opera Master contracts with medical institutions, there were seven cancellations, bringing the cumulative number of contracts to 144. Sales of surgical-use non-woven fabric medical products were down 2.0%, to 10,638 million, reflecting the Groups strategic pricing policy aimed at expanding market share. The cost of sales ratio increased compared with the previous fiscal year, due to a rise in depreciation associated with a sterilization center that commenced operations in stages from May 2011. This was despite improvements in productivity thanks to a higher production volume. Selling, general and administrative expenses were up from the previous fiscal year, due to a number of factors. These included expenses arising from response to production delays due to the Great East Japan Earthquake, as well as expenses related to the subsequent rejuvenation of marketing activities. In addition, we incurred expenses related to future corporate growth as we focused on developing the Opera Master Surgery Management System and conducting experimental research. Consequently, consolidated operating income was down 9.9%, to 7,750 million. Consolidated ordinary income was down 8.6%, to 7,825 million, and consolidated net income was up 3.9%, to 4,624 million. The outlook for fiscal 2012 ending March 31, 2013 remains unclear due to sharp foreign exchange fluc-
tuations and soaring crude oil prices, as well as expectations of peak materials prices stemming from hikes in electricity prices. In the medical equipment industry, as described earlier, business conditions are expected to remain challenging, causing companies to face growing pressure to enhance the efficiency of and streamline management. Under the corporate policy of tireless challenge aimed at dramatic progress, the Hogy Medical Group has positioned the year ahead as a new start for our next 50 years. To this end, we will continue assertively promoting the Opera Master strategy and Surrem strategy. In addition, we will launch a new product, called IC Tracer, in which an IC tag is attached to the gauze used in surgical procedures to permit tracing by machine and thus prevent the gauze from ending up inside the patients body. In addition, we will step up promotion of the Opera Master strategy, as stated earlier. This will entail extending the functions of the Opera Master system components and reinforcing sales of the Surgery Management System, which contributes to visualization in the operating room. June 2012
Jun-ichi Hoki
President & CEO
Resignation Message
Anticipating Exceptional Business Performance to Follow on From the Half a Century of Devotion to Enhancing the Efficiency of Management
to shareholders for their tremendous support and cooperation over the years. In taking part in Hogy Medicals management, I focused on eliminating the unnecessary and maximizing earnings. In the accounting section, the majority of business operations were being spent on correcting errors and so I put double data entry into practice. This eliminated errors, which led to reduction in accounting personnel and there was thus no longer wasteful spending. At distribution centers, a fully-automated warehouse was created in order to improve personnel expenses and productivity. Although it came at a price at first owing to depreciation, significant earnings have managed to be generated in several years time. In addition, mechanization and automation have been pursued for production at plants, as well. In recent years, price cuts have become inevitable due to requests from hospitals. Nevertheless, our streamlining efforts to date have proven effective in being profitable even in the difficult circumstances. Hogy Medical plans to keep releasing new products and promoting further automation of plants, along with increasing sales. Further raising of growth potential and profitability will also be pursued. I would like to conclude this resignation message by expressing my anticipation that Hogy Medical will continue to achieve exceptional business performance. I am truly grateful for everything to date.
Allow me to take this opportunity to thank our shareholders for their loyalty. After long taking part in management since Hogy Medicals inception, as representative director for 46 years and as director for five years for a total of 51 years, I recently stepped down from management. I would like to take this opportunity to express my sincere appreciation
Masao Hoki
Chairman Emeritus & Founder
Tireless Challenge Aimed at Dramatic Progress, and Medium- and Long-Term Strategies
For Tireless Challenge Aimed at Dramatic Progress, Continue to Promote the Opera Master Strategy and Surrem Strategy
The Hogy Medical Group always accords emphasis to product life cycles, acknowledging that even superior products cannot sustain long-term growth. With this in mind, we have implemented a strategy of getting next-generation growth products on stream while sales of mainstay items are expanding. We believe this strategy will enable us to achieve ongoing sales and income growth over the medium to long term. To this end, we are concentrating our management resources on new product development. Going forward, we will develop products that contribute to our further growth. Specifically, we will strive to develop offerings that emphasize medical safety and low invasiveness based on the concept of products that contribute to the medical front lines. In addition, we will continue pursuing a marketing strategy focused on Opera Master. Opera Master is a system incorporating products, logistics and information management. The core products are full-kit products, which are sets of sterilized medical supplies used in operating rooms. On the logistics side, we have established a system whereby hospitals can place orders directly to Hogy Medical from dedicated information terminals, for delivery on the day before surgery. This system is expected to alleviate inventory burden for medical institutions. Furthermore, in the information aspect, in addition to an online ordering system, provision takes the form of unifying the surgery schedule, human resources and cost management systems. Use of this system is expected to facilitate easy operating room scheduling and boost the utilization rate. We have also simplified the management of incoming and outgoing medical supplies to alleviate the burden of inventory control and facilitate easy cost accounting. To date, we have advanced the Opera Master system and concept tailored to the needs of medical front lines. Specifically, launch of the Surgery Management System, which extends the functions of the Opera Master system components, allowed for more detailed analysis of operating room data than before. Going forward, we will undertake repeated development of Opera Master with the aim of expanding it as a solution-based service that meets the needs of medical institutions. In terms of income, we engage in management with a constant aim to increase the ratio of direct to indirect department personnel, where the manufacturing portion is based on facilities and systems that enable manufacturing with few personnel in an aim for plants that are automated as much as possible and the indirect departments are based on a select few personnel. In addition, concerning the Kit Plant, for which considerations are currently underway for expansion, we are considering designs based on the concept of full automation. In this manner, we seek to be a company that can continue to be profitable in the long term.
2012 ANNUAL REPORT
The Hogy Medical Group will further promote the Opera Master strategy that focuses on Opera Master, which contributes to medical institutions management reform, as a pillar of management. Additionally, for mainly non-woven fabric medical products, we will further reinforce the Surrem strategy, which is based on the concept of low price, high function and high quality. We will assertively promote these two strategies in order to distinguish ourselves from the competition.
Sales of Opera Master

(Unit: Hundred millions of yen, rounded down)
25
20
By Reinforcing Seminars, Further Promote the Opera Master Strategy
15
10
Medical institutions are under strong pressure to reform management. In light of such circumstances, the Hogy Medical Group has established techniques enabling medical institutions to visualize how Opera Master can enhance the efficiency of hospital management. We will step up proposals to hospitals emphasizing these techniques. The effects of introducing Opera Master on hospital management have been presented at various academic societies to date with specific case examples of hospitals that have introduced Opera Master. This is serving as a powerful backup of Opera Master marketing activities. In addition, in the previous fiscal year, a hospital superintendent spoke at our luncheon seminar with a presentation on The Economic Effects of Introducing Opera Master for the first time, in which the specific case examples of medical cost savings resulting from introduction of Opera Master aroused great interest of customers. Going forward, we will pursue further reinforcement, such as continuously holding management seminars for hospital directors, as well as holding seminars from the perspective of each of managers, doctors, nurses and administration.
FY 08 FY 08 FY 09 FY 09 FY 10 FY 10 FY 11 FY 11 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
FY 11 contracts FY 08 contracts FY 05 contracts
FY 10 contracts FY 07 contracts FY 04 contracts
FY 09 contracts FY 06 contracts
By Accelerating the Renewal of Products, Further Reinforce the Surrem Strategy
Regarding non-woven fabric products, we will continue to promote the Surrem strategy, which is based on the concept of low price, high function and high quality, to more accurately address the needs of medical institutions and thereby expand our market share. Particularly with drapes, while we managed to expand our market share by pursuing a strategic pricing policy in the previous fiscal year, we will also focus on diversification of products going forward. Additionally, we intend to accelerate the renewal of products for non-woven fabric products in general.
New Sterilization Center in Operation Since May 2011
The Hogy Medical Group takes great care to manufacture products that are safe and can be used without worry. In particular, the Electron Beam Sterilization System is an important system serving as the backbone that supports the stable supply of our disposable medical products. In 1992, Hogy Medical became the first medical manufacturer in Japan to install the system. This is a safe sterilization method that can sterilize objects that are already packaged and can sterilize a great quantity of products in a short time for continuous and efficient sterilization processing, without any residual toxicity or environmental pollution. At Tsukuba Sterilization Center, which was established in 1996 and has one of the largest and most advanced electron beam sterilization facilities in the world, we have realized computer-controlled full automation. Furthermore, a new sterilization center, which was an expansion on the Tsukuba Plant site, has been in operation since May 2011.
New sterilization center on the Tsukuba Plant site
With Indonesia as a Manufacturing Base, Reinforce Sales to Overseas Markets
Hogy Medicals local subsidiary in Indonesia, P.T. Hogy Indonesia, conducts labor-intensive production processes as one of the world's major non-woven fabric medical product processing plants, but we are currently advancing automation of the production department. On the other hand, regarding sales to overseas markets, in view of drawing on the benefits of having a manufacturing base in Indonesia, we have been conducting market research to date concerning medical equipment sales in Southeast Asia. Based on the results of this research, we established a sales company, P.T. Hogy Medical Sales Indonesia, as a subsidiary of P.T. Hogy Indonesia on July 1, 2011. Since Indonesia hosts a large population and has remarkable economic growth, we believe that the country has good potential as a market for medical equipment in the future. The sales company in Indonesia has commenced business operations starting with sales of non-woven fabric products, but plans are for it to engage in development and sales tailored to local hospital needs while exploring the sales unit and services and other ways that would facilitate sales in the future.
P.T. Hogy Indonesia Plant
2012 ANNUAL REPORT
Dividend Increases This Fiscal Year With 24.00 per Quarter for Annual Total of 96.00
Our basic policy with respect to profit appropriation emphasizes payment of cash dividends, and since our foundation we have adhered to our corporate motto of ensuring harmonious coexistence with customers, shareholders, employees and corporations. With regard to this, we continue to reward our shareholders for their patronage. Furthermore, to ensure that the fruits of our performance are swiftly returned to shareholders, we started paying quarterly dividends in fiscal 2006. The consolidated performance forecasts for fiscal 2012 ending March 31, 2013 are net sales of 32,870 million (up 3.1% from fiscal 2011), operating income of 8,000 million (up 3.2%), ordinary income of 8,060 million (up 3.0%) and net income of 5,043 million (up 9.0%). In fiscal 2012, we plan to pay quarterly dividends of 24.00 (20.00 in each of the first and second quarters and 23.00 in each of the third and fourth quarters in the previous fiscal year) for total annual dividends of 96.00 (86.00 in the previous fiscal year) per share.
CSR Activities
Hotaruno Sato Project (Activities to Restore Rice Paddies in Abandoned Fields) As part of our CSR activities, the Hotaruno Sato Project for restoring rice paddies in abandoned fields was launched in 2009. In the Project, Hogy Medical rented a 1.7-hectare piece of land adjacent to the Tsukuba Plant from the local municipal government. On the land, we cultivate and harvest rice without using agrochemicals in an effort to restore and recreate rice fields in abandoned fields in cooperation with an NPO and the local municipal government. Under the rice cultivation method and other guidance of the NPO, Hogy Medical employees and their families take part in the work. By engaging in the Project, we strive to restore and preserve the ecosystem, as well as interact with the local community through the agricultural experience of planting and harvesting. Sponsoring JCMT Hogy Medical is in agreement with the philosophy of and is sponsoring the JCMT (Japanese Council for Medical Training). The JCMT is a privately sponsored training program for doctors from developing countries. The program invites doctors from developing countries, chiefly from Southeast Asia, to Japan, and trains them in advanced medical equipment technology, with the dual aim of international contribution of contributing to the betterment of medical standards in the developing countries and international friendship of promoting better relationships between the countries and Japan through the training.
Corporate Governance and Internal Control System
Basic Approach
Hogy Medical advocates focus on customers and focus on shareholders as fundamental policies, and recognizes that steadily achieving management targets and consistently raising corporate value are essential to ensuring proper shareholder return. To fulfill these objectives, we are reinforcing corporate governance with an emphasis on swift decision-making and appropriate business execution, while fully understanding the absolute importance of strengthening the management oversight function to increase the transparency of management.
Overview of the Current Corporate Governance System
In order to accelerate the decision-making process for the execution of business and to ensure corporate governance, Hogy Medical employs the Financial System Councils study groups model system of electing outside directors and cooperating with the Board of Corporate Auditors, etc. The major roles of the Board of Directors and the Board of Corporate Auditors are as follows. Board of Directors Comprised of six directors (including one outside member), the Board of Directors manages with few members to enable swift management decision-making. In June 1999, Hogy Medical introduced an executive officer system to clarify the distinction between the inherent functions of the Board of Directors (management decision-making and supervision of business execution) and the functions of executive officers and others (business execution). Therefore, we now have a system that permits swift responses to changing business conditions. Board of Corporate Auditors The Board of Corporate Auditors is comprised of three corporate auditors (including two outside members) and audits the execution of duties by directors. Corporate auditors attend important meetings, receive reports from directors and others, examine important decision documents, and monitor subsidiaries and others. All corporate auditors belong to the Board of Corporate Auditors, which determines auditing policies, etc., receives reports on the status, etc. of audits conducted by corporate auditors, receives reports on audits conducted as needed by the independent accounting auditor and, when necessary, exchanges information. In these and other ways, interaction between relevant parties is maximized.
Internal Control System Basic Approach and Maintenance Status
Hogy Medical has a system for ensuring the appropriate execution of business by clarifying the authority and responsibility of each duty, while also implementing appropriate division of business by incorporating a mutual check-and-balance system into the business process, and at
2012 ANNUAL REPORT
the same time recognizes the necessity of continuously conducting reviews and improving and strengthening controls. The Board of Directors has established the Committee Over Internal Controls to operate a system for ensuring that the execution of duties by directors complies with the law and the Articles of Incorporation (this committee is responsible for establishing a system for internal control, compliance and risk management, and for examining, improving, etc. this system; the same applies hereinafter). The Committee Over Internal Controls is chaired by the President of Hogy Medical, and an Internal Control Committee and a Compliance Committee, which each holds a regular meeting once a month, have been set up under the Committee Over Internal Controls. All activities are reported to the Board of Directors.
General Meeting of Shareholders

Election and dismissal Audit
5 directors, 1 outside director
Election and dismissal
Election and dismissal Audit
Board of Directors
Board of Corporate Auditors
1 auditor, 2 outside auditors
Independent Accounting Auditor
Instruction and supervision
Report Management meeting
Report
Report
Independent Accounting
Directors, Executive Officers
Committee Over Internal Controls

Internal Auditing
Internal Auditing Department

Audit
Company Divisions and Group Companies
Summary of Business by Mainstay Product
Opera Master
Total Solution Service Revolving Around Products, Logistics and Information Management Aimed at Boosting Earnings and Efficiency at Medical Institutions
Concept of the Opera Master Strategy

Opera Master is an integrated system incorporating products, logistics and information management and centers on fullkit products that can be adjusted on a 1 surgery or 1 kit product basis in accordance with the hospitals doctor or operative procedure. It is a total solution service that provides complete support of medical institutions enhancement of the efficiency of business operations, inventory reduction and cost control. Introducing the system has substantial benefits for medical institutions, which are currently faced with the pressing task of improving management. These include being able to shorten pre-surgery preparation time considerably, as the kit is packaged to contain all medical supplies required for the surgery and so the surgery can be commenced once the kit is opened. Furthermore, the system facilitates easy cost control, such as of the medical supplies inventory and purchase status. Hogy Medical has positioned promotion of the Opera Master strategy as our top management strategy.
Full kit
Benefits of full-kit products
v v v v Low indirect administrative costs More effective medical supplies control Sterilized using electron beam sterilization Rigorous safety measures taken
Hospital
ma
I n f o r m a ti o n m nag e m ent s y s t e
Lo
g is tic s s y s t e m
Information management system

v v v v Facilitates scheduling of surgeries Allows human resources to be allocated more appropriately Alleviates inventory burden Includes cost-control system
Logistics-related benefits
v v v v One-kit orders (minimum) accepted Four-day minimum manufacturing lead-time Alleviates inventory burden Backed by reliable logistics system
10
2012 ANNUAL REPORT
Opera Masters New Service Surgery Management System

Hogy Medicals Surgery Management System, continuously analyzes burden of work and costs borne on the medical front lines using data obtained through various information gathering tools, based on which proposals that help further improve the efficiency of operating room management are made. One of these tools is the digital picking system. Through the use of a picking list, this system assists in the recognition of medical supplies required for an operative procedure of a scheduled surgery. It also lights the lamp at the location where the medical supplies necessary for the surgery are stored. As a result, preparation time is reduced and made more accurate. Furthermore, by regularly updating this picking list, excess medical supplies spending is kept down and optimization of inventory can be realized. By obtaining and quantifying the surgery progress and human resources utilization with IC tags, the flow of the work burden which may vary according to the time, date or season is assessed and used as a means to find points that can be improved upon.
Drawing profitable plans from accumulated data With the Surgery Management System, plans for profitable operating room utilization can be drawn on the system based on the quantified information accumulated.
Proposing operating room management that is one step ahead
Opera Master has built a four step cycled sustainable support system for improvement of hospital management: PLAN to help plan business improvement, DO to enhance the efficiency of actual work through kit products and a picking list, CHECK to collect and manage information on business operations, ACTION to propose new measures for improvement based on the information obtained.
PLAN ACTION
Setting goal and drawing plan

Examine individual performance data to present a best business plan
Planning
DO
Implementation and action
Business efficiency improvement through tools

Provision of site improvement tool/plan tailored to equipment situation of each facility
Management review and improvement
Future proposal
Submission of analysis of current state of staff with expertise
Inspection and evaluation
CHECK
Data collection and analysis

Real time comparison and analysis of automatically collected data
Concept of the Surrem Strategy

The Surrem Strategy Based on the Concept of Low Price, High Function and High Quality
Regarding non-woven fabric products and simple kit products, Hogy Medical will promote the Surrem strategy, which is based on the concept of low price, high function and high quality, to more accurately address the needs of medical institutions. In the area of non-woven fabric products, in 2007 we launched two new productsK Gown and BR Drapeboth of which have been warmly received by numerous hospitals. In 2009, we unveiled a new line of drapes called Tigalyer. Regarding simple kit products, we have been applying the basic concept of the Surrem strategy to develop kit products for use in hospital ophthalmology and radiology departments.
Low price High quality High function

Accurately addressing the needs of medical institutions
11
Kit Products
Full-Kit Products Packaging All Medical Supplies Meeting Specific Needs
Developed from the perspective of users working on the medical front lines, Hogy Medical proposes all kit products as full-kit products meeting specific needs. We aim for stable supply of surgical-use products in order to meet the latest needs on the medical front lines and also support enhancement of the efficiency of hospital management. Our kit products, which package items required in surgery and treatment in accordance with the requirements of specific medical functions as a set for a diverse range of medical procedures, have the potential to make a huge contribution to the medical front lines. However, this potential cannot be fulfilled unless they accurately reflect the singular features and staffing situations at the frontlines of each medical institution and the understanding of specific medical needs. In our kit products, the quantity of medical supplies is set in accordance with the specific medical needs or requirements of specific medical functions, such as surgery and medical check-ups. Since their release, the kits have captured great attention from the perspective of reducing the burden of work, preventing human error and in-hospital infections, and other aspects of risk management. Once a package is opened, medical personnel can immediately give medical treatment and so the burden or time for preparation is greatly reduced, making it possible to increase the number of surgeries and medical check-ups. Since these products can also help medical institutions improve their earnings, it is increasingly being introduced especially among high volume hospitals which perform many surgeries.
Cesarean Kit
Orthopedic Surgery Kit
Sales of Mainstay Products (2008-2012)

(Unit: Millions of yen, rounded down)
35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
Angio Kit
FY 2007 Mekkin Bag
FY 2008
FY 2009
FY 2010
FY 2011 Others
Non-woven fabrics
Kit products
12
2012 ANNUAL REPORT
Non-Woven Fabric Products
Non-Woven Fabric Product Line Addressing Increasingly Advanced Medical Requirements Meeting the Needs on the Medical Front Lines
Hogy Medicals non-woven fabric products, such as surgical-use gowns, drapes and caps, for preventing in-hospital infections and alleviating business operations are designed to perform to and address the increasingly advanced medical requirements demanded on the medical front lines. Hogy Medical launched disposable masks and caps to support surgical-use non-woven fabric products, such as gowns and drapes, ahead of other companies. Featuring strong barriers and excellent durability, these products help prevent in-hospital infections. These products have now grown in diversity to include sheets, pads, isolation gowns and shoe covers and are evolving into a series which meets the needs of customers ahead of time.
Disposable gowns and disposable drapes
Disposable gowns and disposable drapes
Disposable gowns
13
Mekkin Bag and Other Products
The History of Mekkin Bag Closely Mirrors The History of Hogy Medicals Development
Mekkin Bag represents the start of Hogy Medicals activities to prevent in-hospital infections, which later led to the realization of Sontara and kit products. The material of Mekkin Bag, a sterilization pouch product, must be permeable to facilitate transmission of high-pressure steam and sterilizing gas, while at the same time being able to keep the pouch contents sterile for long periods of time. Hogy Medical developed a sterile paper with a special micro-structure as the material best suited to these conditions. Since the release of Mekkin Bag in 1964 as the first step in the prevention of in-hospital infections, the high sterilization characteristics and the convenience of use led to a rapid increase in demand to now be the recognized name among sterilization pouch products. In addition, we simultaneously advanced the development of indicators used in verifying whether or not the item for sterilization has indeed been sterilized and these are still used by medical institutions today. The history of Mekkin Bag closely mirrors the history of Hogy Medicals development. The evaluation requirements for N95 masks for medical institutions are stricter than for surgical masks and they also have high filtration efficiency. We recommend it for preventing serious infectious diseases, such as tuberculosis, SARS and influenza.
N95-PR masks
Mekkin Bag and indicators
14
2012 ANNUAL REPORT
New Products
Focus on Development of New Products that Contribute to the Medical Front Lines
Hogy Medical is developing new products in the field centering on medical safety, hospital management and business operations support and low invasiveness based on the concept of products that contribute to the medical front lines. The laparoscopic surgical sponge made of polyurethane, SECUREATM, is a product for the purpose of assisting in the exclusion, liquid absorption, lavage and astriction performed during laparoscopic surgery. It improves the efficiency and safety of laparoscopic surgery by eliminating the need for retractors, which may damage internal organs, and the process of placing and retrieving gauze in the abdominal cavity. In addition, IC Tracer is a system in which an IC tag is attached to the gauze used in surgical procedures to permit tracing by machine and thus prevent the gauze from ending up inside the patients body. As the accurate and fast gauze count by machine is anticipated to lead to such effects as alleviate the burden of work on nurses and enhance safety, we believe that it is a product that can contribute to the medical front lines. Hogy Medical will keep striving to develop new products aimed at further contribution to safe medical care and hospital management improvement.
SECUREATM, a laparoscopic surgical sponge
In view of preventing the gauze used in surgical procedures from ending up inside the patients body, we developed a gauze counting system called IC Master that is mainly comprised of IC Gauze, which has an IC tag attached, and IC Tracer, which is a reader that provides an instant count.
15
Five-Year Financial Data Overview (Consolidated)
Years ended March 31, 2012

Income Statement Data Net sales Operating income Income before income taxes and minority interests Net income Balance Sheet Data Common stock Additional paid-in capital Net assets Total assets Property, plant and equipment, net Cash Flow Data Net cash provided by operating activities Net cash used in investing activities Net cash (used in) provided by financing activities Cash and cash equivalents at end of year Per Share Data Net income (basic) Net income (diluted) Net assets Key Financial Data Capital expenditures Depreciation expenses R&D expenses Equity ratio (%) Return on equity (%) Price/earnings ratio (times) Number of shares issued (thousands) Number of employees at year-end*
2011
2010
(Millions of yen unless indicated otherwise)
2009
2008
2012
31,873 7,750 7,822 4,624 7,123 8,336 64,013 72,522 29,585
31,311 8,601 7,475 4,453 7,123 8,336 60,698 69,834 31,518 7,250 (3,888) (2,545) 18,139 283.10 3,857.83 3,990 2,277 417 86.90 7.47 12.58 16,341 1,453 (421)
31,339 7,974 8,103 4,921 7,123 8,336 58,506 68,259 30,121 8,173 (3,713) 750 17,405
(yen)
31,009 7,501 5,996 3,584 7,123 8,336 51,505 61,941 29,073 6,023 (2,270) (2,344) 12,182 238.47 3,425.71 2,689 2,936 269 83.13 7.09 22.56 16,341 1,485 (783)
29,010 7,232 6,825 4,054 7,123 8,336 49,631 61,514 29,547 8,407 (3,201) (2,205) 10,838 269.73 3,300.59 1,570 2,728 259 80.66 8.31 19.02 16,341 1,485 (472)
388,044 94,352 95,232 56,303 86,721 101,486 779,321 882,910 360,180
6,278 (2,810) (2,310) 19,239
76,436 (34,219) (28,123) 234,231

(U.S. dollars)
294.01 4,069.17
315.74 3,718.27 3,471 2,557 443 85.69 8.95 13.65 16,341 1,465 (653)
3.58 49.54
(Millions of yen, unless indicated otherwise)
1,798 3,064 406 88.26 7.42 12.57 16,341 1,441 (516)
21,889 37,314 4,948
Note: The U.S. dollar amounts in this annual report are translated from Japanese yen, for convenience only, at the rate of 82.14 = U.S.$1.00, the rate of exchange on March 31, 2012. * The number of employees is the size of the employed population. The annual average number of employees who are on fixed-term employment contracts with consolidated subsidiaries are indicated in parentheses.
Net Sales
(bn) (bn)
Operating Income
(bn)
Total Assets
80 60 40
40 30 20
10 8 6 4
10 0
2008 2009 2010 2011 2012
Years ended in March
2 0
2008 2009 2010 2011 2012
20 0
2008 2009 2010 2011 2012
16
2012 ANNUAL REPORT
Financial Review (Consolidated)
Performance
Net Sales Net sales were up 1.8% from the previous consolidated fiscal year, to 31,873 million. Within this total, sales of surgical-use medical kit products were up 5.9%, to 15,232 million, owing mainly to Opera Master, a system incorporating products, logistics and information management. During the consolidated fiscal year under review, although the Group signed 20 Opera Master contracts with medical institutions, there were 7 cancellations, bringing the cumulative number of contracts to 144 contracts. Sales of surgicaluse non-woven fabric medical products were down 2.0%, to 10,638 million, reflecting the Groups strategic pricing policy aimed at expanding market share. The Hogy Medical Group sustained damage to production facilities from the Great East Japan Earthquake, which affected business results in the first half of the fiscal year. However, we gradually stepped up marketing activities, spurred by promotional tours of the Surgery Management System showroom, which extends the functions of the Opera Master system components. Accordingly, we were able to conclude contracts on a par with previous years and achieve sales growth in terms of net sales overall as well. Operating Income The cost of sales ratio increased compared with the previous fiscal year, due to a rise in depreciation associated with a sterilization center that commenced operations in stages from May 2011. This was despite improvements in productivity thanks to a higher production volume. Selling, general and administrative expenses were up from the previous fiscal year, due to a number of factors. These included expenses arising from response to production delays due to the Great East Japan Earthquake, as well as expenses related to the subsequent rejuvenation of marketing activities. In addition, we incurred expenses related to future corporate growth as we focused on developing the Opera Master Surgery Management System and conducting experimental research. Consequently, operating income was down 9.9%, to 7,750 million. Ordinary Income In the non-operating category, we received dividend income and incurred foreign exchange loss on foreign currency assets. Consequently, ordinary income was down 8.6%, to 7,825 million. Net Income Among extraordinary items, while there was no large increase or decrease in the fiscal year under review, there was a 1,054 million extraordinary loss caused by loss on valuation of inventories and factory restoration costs resulting from the Great East Japan Earthquake in the previous fiscal year. Consequently, net income was up 3.9%, to 4,624 million.
Financial Position Total assets at the end of the fiscal year amounted to 72,522 million, up 2,688 million from the end of the previous fiscal year. Current assets were up 2,952 million, to 36,465 million. This was mainly due to a 1,265 million increase in notes and accounts receivable and a 1,104 million increase in cash and bank deposits. Fixed assets were down 264 million, to 36,056 million. Within this figure, property, plant and equipment were down 1,933 million, to 29,585 million. Of the 6,353 million in machinery, equipment and vehicles, there was an increase of 3,556 million for manufacturing facility expansion as an extension to the Tsukuba Sterilization Center. In addition, intangible assets were up 402 million, to 1,291 million. Investments and other assets were up 1,266 million, to 5,179 million. Total liabilities at the end of the fiscal year amounted to 8,508 million, down 627 million from the end of the previous fiscal year. Current liabilities were down 716 million, to 7,606 million. Long-term liabilities amounted to 902 million. Net assets at the end of the fiscal year amounted to 64,013 million, up 3,315 million from the end of the previous fiscal year. The main factor boosting net assets was 4,624 million in net income, while the main factor holding down net assets was 1,384 million in cash dividends paid. As a result, the equity ratio rose from the 86.9% at the end of the previous fiscal year to 88.3%.
Cash Flows
Cash flows during the fiscal year were as follows: Cash flows from operating activities: Net inflow of 6,278 million (decrease in net inflow of 971 million from the previous fiscal year) Cash flows from investing activities: Net outflow of 2,810 million (decrease in net outflow of 1,077 million from the previous fiscal year) Cash flows from financing activities: Net outflow of 2,310 million (decrease in net outflow of 235 million from the previous fiscal year) As a result, cash and cash equivalents were up 1,100 million, to 19,239 million. (Cash Flow from Operating Activities) Net cash provided by operating activities amounted to 6,278 million, down 971 million from the previous fiscal year. This was mainly attributable to 7,822 million in income before income taxes and minority interests and 3,064 million in depreciation, offset by 2,734 million in income taxes paid and 1,284 million in increase in notes and accounts receivable. (Cash Flow from Investing Activities) Net cash used in investing activities amounted to 2,810 million, down 1,077 million from the previous fiscal year. This was mainly attributable to purchase of property, plant and equipment primarily related to the Tsukuba Sterilization Center expansion. (Cash Flow from Financing Activities) Net cash used in financing activities amounted to 2,310 million, down 235 million from the previous fiscal year. This was mainly attributable to repayment of long-term debt and cash dividends paid.
17
Key Financial Data (Consolidated)
Profitability
Stability
Return on Equity (ROE)

(%) 10.0 7.5 (%) 90 80 70 60 50
Equity Ratio
5.0 2.5 0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Return on Assets (ROA)

(%) 10.0 7.5 5.0 200 2.5 0 100 0 (%) 500 400 300
Current Ratio
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Net Income
(bn)
Fixed Ratio
() 100
5.0 4.0 3.0
75
50 2.0 1.0 0 25 0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
18
2012 ANNUAL REPORT
Capital Expenditures and Related Data
Per Share Data
Capital Expenditures
(bn)
Earnings per Share (EPS)

(yen)
4.0 3.0
400 300 200
2.0
1.0 0
100
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Depreciation Expenses
(bn) (yen)
Dividends per Share

100 80 60
4.0
3.0 2.0
40 1.0 0 20 0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Years ended in March Note: Year ended in March 2011 includes commemorative dividend of 8
Cash Flow
(bn)
Payout Ratio
(%) 40 30
10.0 8.0 6.0
20 4.0 2.0 0 10
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
19
Consolidated Financial Statements
Hogy Medical Co., Ltd. and Subsidiaries Consolidated Balance Sheets
As of March 31, 2012

(Millions of yen)
2011
Assets Current assets: Cash and bank deposits (Note 13) Notes and accounts receivable Inventories (Note 3) Deferred tax assets (Note 6) Other current assets Allowance for doubtful accounts Total current assets
(Thousands of U.S. dollars) (Note 2)
2012
19,610 10,357 5,511 384 608 (6) 36,465
18,505 9,091 4,942 621 356 (4) 33,513
$238,741 126,096 67,094 4,680 7,411 (75) 443,948
Property, plant and equipment, at cost: Buildings and structures Machinery, equipment and vehicles Land Construction in progress Other Less: Accumulated depreciation Property, plant and equipment, net
26,326 24,146 9,361 982 2,660 63,478 (33,892) 29,585
26,335 20,251 9,375 4,283 2,541 62,786 (31,268) 31,518
320,502 293,972 113,974 11,962 32,393 772,804 (412,623) 360,180
Investments and other assets: Investment securities (Note 16) Intangible assets Long-term time deposits Guarantee deposits Prepaid pension cost Deferred tax assets (Note 6) Other assets Total investments and other assets
2,627 1,291 1,000 490 229 62 769 6,471
2,257 888 512 167 205 771 4,802
31,992 15,718 12,174 5,973 2,796 762 9,363 78,780
Total assets
72,522
69,834
$882,910
20
2012 ANNUAL REPORT
As of March 31, 2012

(Millions of yen)
2011
Liabilities and net assets Current liabilities: Notes and accounts payable: Trade Construction Current portion of long-term debt (Note 4) Income taxes payable Provision for loss on disaster Other current liabilities Total current liabilities Long-term liabilities: Deferred tax liabilities (Note 6) Accrued retirement benefits (Note 7) Long-term accounts payable other Other long-term liabilities Total long-term liabilities Net assets: Shareholders equity: Common stock: Authorized 65,000,000 shares; Issued 16,341,155 shares Additional paid-in capital (Note 5) Retained earnings (Note 5) Treasury stock, at cost (Note 12): 611,220 shares in 2012 and 610,955 shares in 2011 Total shareholders equity Accumulated other comprehensive income: Unrealized gain (loss) on other securities Deferred gain (loss) on hedges Translation adjustments Total accumulated other comprehensive income (loss) Minority interests Total net assets Total liabilities and net assets
2012
3,715 479 1,801 1,609 7,606 147 384 370 902
3,338 380 925 1,576 691 1,411 8,322 8 44 394 366 813
$ 45,238 5,842 21,929 19,589 92,599 1,800 4,679 4,509 10,989
7,123 8,336 52,750 (3,317) 64,892 326 25 (1,236) (884) 5 64,013 72,522
7,123 8,336 49,510 (3,316) 61,653 78 9 (1,055) (968) 13 60,698 69,834
86,721 101,486 642,207 (40,388) 790,026 3,972 304 (15,050) (10,774) 69 779,321 $882,910
See notes to consolidated financial statements.
21
Hogy Medical Co., Ltd. and Subsidiaries Consolidated Statements of Income

2012

(Millions of yen)
2011
2012
Net sales Cost of sales Gross profit Selling, general and administrative expenses (Note 9) Operating income Other income (expenses): Interest income Interest expense Dividend income Exchange (loss) gain, net Loss on disposal of property, plant and equipment Gain on sales of investment securities Reversal of allowance for doubtful accounts Effect of adoption of accounting standard for asset retirement obligations Loss on valuation of golf memberships Commemorative event expenses Loss on disaster (Note 10) Other, net Other income (expenses), net Income before income taxes and minority interests Income taxes (Note 6): Current Deferred Total income taxes Income before minority interests Minority interests Net income
31,873 15,711 16,162 8,412 7,750 3 (5) 55 (27) (3) 51 72 7,822 2,956 240 3,197 4,625 (0) 4,624
31,311 14,829 16,482 7,880 8,601 3 (20) 51 (152) (16) 101 15 (32) (10) (90) (1,054) 77 (1,126) 7,475 3,192 (171) 3,020 4,454 (1) 4,453
$388,044 191,277 196,766 102,414 94,352 38 (69) 670 (340) (47) 628 880 95,232 35,992 2,930 38,923 56,309 (5) $ 56,303
Hogy Medical Co., Ltd. and Subsidiaries Consolidated Statements of Comprehensive Income
2012

(Millions of yen)
2011
2012
Income before minority interests Other comprehensive income: Unrealized gain (loss) on other securities Deferred gain (loss) on hedges Translation adjustments Total other comprehensive income (loss) (Note 11) Comprehensive income Total comprehensive income attributable to: Shareholders of Hogy Medical Co., Ltd. Minority interests
4,625 248 16 (176) 88 4,713 4,708 4
4,454 (267) (71) (379) (717) 3,737 3,737 (0)
$56,309 3,021 194 (2,143) 1,072 $57,381 $57,323 $ 58
22
2012 ANNUAL REPORT
Hogy Medical Co., Ltd. and Subsidiary Consolidated Statements of Changes in Net Assets
Common stock Number of Amount shares Shareholders equity Additional paid-in capital Retained earnings (Millions of yen) Treasury stock, at cost Total shareholders equity
Balance at March 31, 2010 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2011 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2012
16,341,155 16,341,155 16,341,155
7,123 7,123 7,123
8,336 8,336 8,336
46,598 (1,541) 4,453 (0) 2,911 49,510 (1,384) 4,624 3,240 52,750
(3,313) (3) 0 (3) (3,316) (0) (0) (3,317)
58,744 (1,541) 4,453 (3) 0 2,908 61,653 (1,384) 4,624 (0) 3,239 64,892
Accumulated other comprehensive income Unrealized gain (loss) on other securities Deferred gain (loss) on hedges Total accumulated other comprehensive income (loss)
Translation adjustments
Minority interests
Total net assets
(Millions of yen)
Balance at March 31, 2010 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2011 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2012
345 (267) (267) 78 248 248 326
80 (71) (71) 9 16 16 25
(678) (377) (377) (1,055) (180) (180) (1,236)
(252) (716) (716) (968) 83 83 (884)
14 (0) (0) 13 (8) (8) 5
58,506 (1,541) 4,453 (3) 0 (716) 2,191 60,698 (1,384) 4,624 (0) 75 3,315 64,013
23
Shareholders equity Common stock Additional paid-in capital Retained earnings Treasury stock, at cost Total shareholders equity
Balance at March 31, 2011 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2012
$86,721 $86,721
$101,486 $101,486
$602,755 (16,852) 56,303 39,451 $642,207
$(40,377) (10) (10) $(40,388)
$750,585 (16,852) 56,303 (10) 39,440 $790,026
Accumulated other comprehensive income Unrealized gain (loss) on other securities Deferred gain (loss) on hedges Total accumulated other comprehensive income (loss)
Translation adjustments
Minority interests
Total net assets
Balance at March 31, 2011 Cash dividends paid Net income Purchases of treasury stock Disposition of treasury stock Other, net change Net changes during the year Balance at March 31, 2012
$ 950 3,021 3,021 $3,972
$109 194 194 $304
$(12,854) (2,196) (2,196) $(15,050)
$(11,793) 1,019 1,019 $(10,774)
$168 (99) (99) $ 69
$738,960 (16,852) 56,303 (10) 919 40,360 $779,321
24
2012 ANNUAL REPORT
Hogy Medical Co., Ltd. and Subsidiaries Consolidated Statements of Cash Flows
2012 Operating activities Income before income taxes and minority interests Depreciation Loss on valuation of golf memberships Effect of adoption of accounting standard for asset retirement obligations Retirement benefits, net of payments (Decrease) increase in allowance for doubtful accounts Interest and dividend income Interest expense Gain on sales of investment securities Exchange loss Loss on disaster Loss (gain) on sales of property, plant and equipment Loss on disposal of property, plant and equipment Changes in assets and liabilities: Notes and accounts receivable Inventories Notes and accounts payable Accrued consumption taxes and other Consumption taxes refund receivable and other Other current assets Other current liabilities Other investments Other liabilities Other Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by operating activities Investing activities Increase in time deposits Proceeds from time deposits Purchases of investment securities Proceeds from sales of investment securities Purchase of stocks of subsidiaries and affiliates Purchase of property, plant and equipment Proceeds from sales of property, plant and equipment Purchases of intangible assets Payments for loans receivable Collection of loans receivable Decrease (increase) in other investments Net cash used in investing activities Financing activities Repayment of long-term debt Proceeds from sales of treasury stock Purchases of treasury stock Cash dividend paid Other Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (Note 13)

(Millions of yen)
2011
2012
7,822 3,064 42 (4) (58) 5 31 (0) 3 (1,284) (612) 388 (64) (75) (179) (142) 28 (6) 1 8,961 58 (7) (2,734) 6,278 (1,010) 5 (12) (1,274) 1 (523) (15) 12 6 (2,810) (925) (0) (1,384) 0 (2,310) (57) 1,100 18,139 19,239
7,475 2,277 10 32 (4) (12) (55) 20 (101) 157 1,019 0 15 (27) 270 (85) (61) (22) (34) (89) 3 7 10,793 55 (21) (3,576) 7,250 (58) 54 (75) 175 (3,501) 2 (489) (10) 19 (4) (3,888) (1,000) 0 (3) (1,541) (2,545) (83) 733 17,405 18,139
$ 95,232 37,314 522 (51) (708) 69 383 (7) 46 (15,636) (7,462) 4,726 (789) (914) (2,189) (1,732) 350 (75) 22 109,101 708 (86) (33,287) 76,436 (12,298) 70 (153) (15,521) 19 (6,368) (191) 147 75 (34,219) (11,261) (10) (16,852) 0 (28,123) (698) 13,394 220,836 $234,231
25
Hogy Medical Co., Ltd. and Subsidiaries Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies (a) Basis of presentation Hogy Medical Co., Ltd. (the Company) maintains its accounting records in accordance with accounting principles generally accepted in Japan, and its overseas subsidiaries maintain its accounting records in conformity with that of its country of domicile. The accompanying consolidated financial statements 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 are compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. For the purposes of this document, certain reclassifications have been made to present the accompanying consolidated financial statements in a format which is familiar to readers outside Japan. In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information. The consolidated subsidiaries of the Company are P.T. Hogy Indonesia and P.T. Hogy Medical Sales Indonesia. P.T. Hogy Medical Sales Indonesia, which was established in the year ended March 31, 2012, is included in the consolidated financial statements. (b) Basis of consolidation In accordance with the accounting standard for consolidation, consolidated financial statements are required to include the accounts of the parent company and all its subsidiaries over which substantial control is exerted either through majority ownership of voting stock and/or by other means. As a result, the accompanying consolidated financial statements include the accounts of the Company and two consolidated subsidiaries for the year ended March 31, 2012 (one in 2011). There is no non-consolidated subsidiary or affiliated company accounted by equity-method. All significant intercompany balances and transactions have been eliminated in consolidation. The subsidiaries are consolidated on the basis of a fiscal period ending on December 31, which differs from that of the Company; however, the necessary adjustments are made if the effect of this difference is material. (c) Foreign currency translation The revenue and expense accounts of the overseas consolidated subsidiaries are translated into yen at the rate of exchange in effect at the balance sheet date. The balance sheet accounts, except for the components of shareholders equity, are also translated into yen at the rate of exchange in effect at the balance sheet date. The components of shareholders equity are translated at their historical exchange rates. Differences arising from the translation are presented as translation adjustments and minority interests in the consolidated financial statements. Monetary assets and liabilities of the Company denominated in foreign currencies are translated at the current exchange rates in effect at each balance sheet date. All revenues and expenses denominated in foreign currencies are translated at the rates of exchange prevailing when such transactions were made. The resulting exchange loss or gain is charged or credited as other expense or income. (d) Cash equivalents All highly liquid investments, with a maturity of three months or less when purchased and which are readily convertible into known amounts of cash and are so close to maturity that they represent only an insignificant risk of any change in value attributable to changes in interest rates, are considered cash equivalents. The definition of cash and cash equivalents in the consolidated statements of cash flows differs from that of cash and bank deposits in the consolidated balance sheets. Reconciliation between these is presented in Note 13. (e) Securities Securities other than those of the subsidiaries and affiliates are classified as other securities. Marketable securities classified as other securities are carried at fair value with any changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method. (f) Derivatives Derivatives positions are stated at their respective fair market value. The Company utilizes forward foreign exchange contracts, currency swaps and currency options to hedge forecasted foreign currency transactions related to its foreign purchase commitments. Forward foreign exchange contracts, currency swaps and currency options which meet certain hedging criteria are accounted for by the allocation method. The Company uses derivatives to reduce their exposure to fluctuation in foreign exchange rates. Since the substantial terms and conditions of the hedge instruments and the hedged forecasted transactions are the same, the Company considers its hedging activities highly effective. (g) Inventories Finished goods, work in process and raw materials are stated at cost determined by the average method. Merchandise is stated at cost determined by the moving average method. In case the profitability of the inventories has declined, the book value is reduced accordingly. Supplies are stated at their most recent purchase prices.
26
2012 ANNUAL REPORT
(h) Depreciation and amortization Depreciation of property, plant and equipment (excluding lease assets) of the Company is principally calculated by the declining-balance method over the estimated useful lives of the respective assets. However, buildings (excluding accessory equipment) acquired by the Company after April 1, 1998 are depreciated by the straight-line method over the estimated useful lives of the respective assets. Property, plant and equipment of consolidated subsidiaries are depreciated principally by the straight-line method over the estimated useful lives of the respective assets. The principal estimated useful lives used for computing depreciation are as follows: Buildings and structures 3 to 50 years Machinery, equipment and vehicles 4 to 12 years Intangible assets (excluding lease assets), including costs for computer software, are amortized by the straight-line method over their estimated useful lives (5 years). Long-term prepaid expenses are amortized by the straight-line method. (i) Allowance for doubtful accounts The allowance for doubtful accounts is provided at an amount sufficient to cover possible losses on the collection of receivables. For the Company, the amount of the allowance is determined based on the historical rate of losses on receivables plus an estimate of the individual amounts deemed unrecoverable. (j) Provision for employees bonuses The provision for employees bonuses represents a provision for the future payment of employees bonuses. The amount at each balance sheet date is included in other current liabilities. (k) Provision for directors bonuses The provision for directors bonuses represents a provision for the future payment of directors bonuses. The amount at each balance sheet date is included in other current liabilities. (l) Retirement and severance benefits Accrued retirement benefits for employees are provided at an amount calculated based on the retirement benefit obligation and the fair value of the pension plan assets, as adjusted for the net unrecognized retirement benefit obligation at transition, unrecognized actuarial differences, and unrecognized prior service cost. Actuarial differences are amortized in the year following the year in which the difference is recognized primarily by the straight-line method over a period of 10 years, which falls within the estimated average remaining years of service of the eligible employees.
(m) Income taxes Deferred tax assets and liabilities are recognized in the consolidated financial statements with respect to the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws which will be in effect when the differences are expected to reverse. (n) Consumption taxes Transaction subject to consumption taxes are recorded at amounts exclusive of consumption taxes. (o) Additional information Effective April 1, 2011, the Company has adopted the Accounting Standards Board of Japan (ASBJ) Statement No. 24, Accounting Standard for Accounting Changes and Error Corrections and ASBJ Guidance No. 24, Guidance on Accounting Standard for Accounting Changes and Error Corrections issued on December 4, 2009. 2. U.S. Dollar Amounts For the convenience of the readers, the accompanying consolidated financial statements with respect to the year ended March 31, 2012 have been presented in U.S. dollars by translating all yen amounts at 82.14 = U.S.$1.00, the exchange rate prevailing on March 31, 2012. This translation should not be construed as a representation that yen have been, could have been, or could in the future be, converted into U.S. dollars at the above or any other rate. 3. Inventories Inventories at March 31, 2012 and 2011 were as follows:
2012 Merchandise and finished goods Work in process Raw materials and supplies 3,070 303 2,137 5,511 2011 2,570 288 2,083 4,942 2012
(Millions of yen)
$37,380 3,694 26,018 $67,094
4. Long-Term Debt Long-term debt at March 31, 2012 and 2011 are summarized as follows:
2012 Loans from banks and insurance companies, due through 2011: Unsecured Less: Current portion 2011 2012
(Thousands of U.S. dollars) (Millions of yen)
925 (925)
$ $
The weighted average interest rates of long-term debt at March 31, 2011 were 1.45%.
27
5. Shareholders Equity The Corporation Law of Japan (the Law) provides that amounts from additional paid-in capital and retained earnings may be distributed to the shareholders at any time by resolution of the shareholders or by the Board of Directors if certain provisions are met subject to the extent of the applicable sources of such distributions. The Law further provides that amounts equal to 10% of such distributions be transferred to the capital reserve included in additional paid-in capital or the legal reserve included in retained earnings based on the applicable sources of such distributions until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. 6. Income Taxes Income taxes applicable to the Company comprise corporation tax, inhabitants taxes and enterprise tax which, in the aggregate, resulted in a statutory tax rate of approximately 40% for 2012 and 2011. Income taxes of the overseas consolidated subsidiaries are, in general, based on the tax rate applicable in their country of incorporation. The major components of deferred tax assets and liabilities at March 31, 2012 and 2011 are summarized as follows:
2012 Current: Deferred tax assets: Enterprise tax payable Provision for employees bonuses Unrealized gain on inventories Social insurance premium on accrued bonuses Deferred gain on hedges Provision for loss on disaster Other Total deferred tax assets Deferred tax liabilities: Deferred gain on hedges Total deferred tax liabilities Deferred tax assets, net 2011 2012
Following the promulgation on December 2, 2011 of the Act for Partial Revision of the Income Tax Act, etc. for the Purpose of Creating Taxation System Responding to Changes in Economic and Social Structures (Act No. 114 of 2011) and the Act for Special Measures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake (Act No. 117 of 2011), the Japanese corporate tax rate will be reduced and a special reconstruction corporate tax will be imposed effective from the fiscal year beginning on April 1, 2012. In accordance with this reform, the effective statutory tax rates of the Company, which are used to measure its deferred tax assets and liabilities, will be reduced to 37.18% from 39.77% for the temporary differences that are expected to be settled or realized during the fiscal year beginning on April 1, 2012 through the fiscal year beginning on April 1, 2014, and to 34.8% for the temporary differences that are expected to be settled or realized in or after the fiscal year beginning on April 1, 2015. As a result of these changes in the effective statutory tax rate, net deferred tax assets decreased by 33 million ($410 thousand) as of March 31, 2012, and income taxes deferred, unrealized gain (loss) on other securities, and deferred gain (loss) on hedges increased by 59 million ($725 thousand), 24 million ($302 thousand), and 1 million ($12 thousand) for the year ended March 31, 2012, respectively. 7. Retirement Benefit Plans The Companys policy is to pay retirement allowances to all eligible employees who have worked for the Company over one year. In accordance with the shift to the defined benefit corporate pension system, the Company has been paying retirement allowances (lumpsum or pension) from the externally contributed system regardless of age since September 1, 2009. There is a lump-sum retirement payment plan for executive officers in accordance with internal regulations. The overseas subsidiaries have a lump-sum retirement payment plan in accordance with the law in their countries of domicile. The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the accompanying consolidated balance sheets at March 31, 2012 and 2011 for the Companys defined benefit plans:
2012 2011 2012
123 183 32 28 19 387 (3) (3) 384
117 161 30 24 2 274 8 621 621
$ 1,501 2,239 391 346 240 4,719 (39) (39) $ 4,680
Non-current: Deferred tax assets: 45 Accrued retirement benefits Allowance for retirement benefits for 133 directors and corporate auditors Loss on valuation of investment 125 securities Asset retirement obligations 12 (Guarantee deposits) 11 Loss on valuation of golf memberships 7 Other 335 Total deferred tax assets Deferred tax liabilities: Accrued retirement benefits Deferred gain on hedges Deferred gain on property and equipment Unrealized gain or loss on securities Total deferred tax liabilities Deferred tax assets, net (79) (11) (7) (174) (273) 62
11 157 142 14 13 4 343 (66) (8) (19) (51) (145) 197
$ 554 1,628 1,523 155 139 87 4,088 (973) (140) (92) (2,120) (3,326) $ 762
Retirement benefit obligation (2,951) (2,654) Plan assets at fair value 2,358 2,152 Unfunded retirement benefit obligation (593) (501) Unrecognized actuarial differences 675 624 Net retirement benefit obligation 81 122 Less: Prepaid pension cost 229 167 Accrued retirement benefits for (147) (44) employees
$(35,931) 28,707 (7,223) 8,219 996 2,796 $ (1,800)
28
2012 ANNUAL REPORT
The components of retirement benefit expense for the years ended March 31, 2012 and 2011 are outlined as follows:
2012 Service cost Interest cost Expected return on plan assets Amortization of actuarial differences Total 267 49 (53) 90 353 2011 165 45 (51) 97 256 2012
Future lease revenues (including the interest portion thereon) subsequent to March 31, 2012 for finance leases accounted for as operating leases, that do not transfer ownership of the leased assets to the lessee, are summarized as follows:
2012 Due in one year or less Due after one year Total 2011 1 1 2012
$3,256 600 (655) 1,101 $4,302
$ $
The assumptions used in accounting for the above plans were as follows:
2012 Discount rates Expected rate of return on plan assets Actuarial cost allocation method 1.6% 2.5% 2011 1.6% 2.5%
9. Selling, General and Administrative Expenses Major components of selling, general and administrative expenses for the years ended March 31, 2012 and 2011 were as follows:
2012 Freight Sample expenses Allowance for doubtful accounts Salaries, wages and bonuses for employees Allowance for employees bonuses Allowance for directors bonuses Retirement and severance benefits Rental expenses for real estate Research and development expenses Depreciation Transportation 837 430 2,175 317 90 259 465 344 724 459 2011 818 316 13 2,229 260 90 162 475 361 642 450 2012
The retirement benefit obligation is attributed to each period by the straight-line method over the estimated years of service of the eligible employees. 10 years (amortized by the straight-line method over a period which falls within the average remaining years of service of the eligible employees, effective the year subsequent to the period when the difference occurred).
$10,198 5,244 26,485 3,865 1,095 3,155 5,663 4,194 8,824 5,592
Amortization period for actuarial differences:
8. Leases (a) Lessor The following amounts represent the acquisition costs, accumulated depreciation and net book value of the leased assets at March 31, 2012 and 2011, which would have been reflected in the balance sheet if finance leases that do not transfer ownership to the lessee and currently accounted for as operating leases had been capitalized.
As of March 31, 2012 Equipment Total Equipment
(Millions of yen)
Research and development costs included in selling, general and administrative expenses and manufacturing costs for the years ended March 31, 2012 and 2011 amounted to 406 million ($4,948 thousand) and 417 million, respectively. 10. Loss on Disaster The Company recorded a loss due to the Great East Japan Earthquake for the year ended March 31, 2011. The components of loss on disaster were as follows:
2012 Loss on valuation of inventories Loss on disposal of property, plant and equipment Removal and repair expenses Special payments to employees due to the disaster Provision for loss on disaster Others 2011 308 14 4 33 691 3 1,054 2012
Total
(Millions of yen)
Acquisition costs Accumulated depreciation Net book value
9 9
9 9
$117 117 $
$117 117 $
$ $
As of March 31, 2011 Equipment Total

(Millions of yen)
Acquisition costs Accumulated depreciation Net book value
9 8 1
9 8 1
Lease revenues relating to finance leases accounted for as operating leases for the years ended March 31, 2012 and 2011 amounted to 1 million ($18 thousand) and 2 million respectively. The depreciation expense of the leased assets, which were computed by the straightline method over the respective lease terms, for the years ended March 31, 2012, and 2011 amounted to 1 million ($18 thousand) and 1 million, respectively.
29
11. Other Comprehensive Income The following table presents reclassifications adjustments and tax effects allocated to each component of other comprehensive income for the year ended March 31, 2012:
2012
(Millions of yen)
(2) Dividends Dividends paid For the year ended March 31, 2012
Resolution
Meeting of the Board of Directors on April 19, 2011 Meeting of the Board of Directors on July 12, 2011 Meeting of the Board of Directors on October 13, 2011 Meeting of the Board of Directors on January 16, 2012
2012
Type of shares
Common stock Common stock Common stock Common stock
Total Dividends Cut-off dividends per share date

(Millions of yen) 393 314 314 361 (Yen) 25 20 20 23 March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011
Effective date
May 31, 2011 August 31, 2011 November 30, 2011 February 29, 2012
Unrealized gain on other securities: Amount arising during the year Tax effect Unrealized gain on other securities Deferred gain on hedges: Amount arising during the year Tax effect Deferred gain on hedges Translation adjustments: Amount arising during the year Tax effect Translation adjustments Total other comprehensive income
370 (122) 248 24 (8) 16 (176) (176) 88
$ 4,513 (1,492) 3,021 302 (107) 194 (2,143) (2,143) $ 1,072
Resolution
Type of shares
Total Dividends Cut-off dividends per share date

(Thousands of U.S. dollars) (U.S. dollars) $4,787 $3,830 $3,830 $4,404 $0.30 $0.24 $0.24 $0.28 March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011
Effective date
12. Net Assets (a) Information regarding changes in net assets for the years ended March 31, 2012 and 2011 is as follows: (1) Shares issued and outstanding/treasury stock For the year ended March 31, 2012
Number of shares at April 1, 2011 Number of shares at March 31, 2012
For the year ended March 31, 2011

Resolution
Type of shares
Total Dividends dividends per share

(Millions of yen) 361 393 393 393 (Yen) 23 25 25 25
Cut-off date
March 31, 2010 June 30, 2010 September 30, 2010 December 31, 2010
Effective date
Types of share Shares issued: Common stock Treasury stock: Common stock (Note 1)
Increase
Decrease
(Thousands of shares)
16,341 610
16,341 611
Note: 1. Increase due to purchase of fractional shares less than one trading unit
Dividends of which the cut-off date was in the year ended March 31, 2012 and the effective date will be in the year ending March 31, 2013
Resolution Type of shares Resources Total of Dividends Cut-off Effective dividends dividends per share date date
(Millions of yen) Retained earnings (Yen) March 31, 2012 May 31, 2012
For the year ended March 31, 2011

Number of shares at April 1, 2010 Number of shares at March 31, Decrease 2011
Types of share Shares issued: Common stock Treasury stock: Common stock (Notes 1 and 2)
Increase
Meeting of the Board of Directors Common on April 11, 2012 stock
361
23
(Thousands of shares)
16,341 610
16,341 610
Resolution
Type of shares
Resources Total Dividends Cut-off Effective of date date dividends dividends per share
(Thousands of U.S. dollars) $4,404 Retained earnings (U.S. dollars) March 31, 2012 May 31, 2012
$0.28
Notes: 1. Increase due to purchase of fractional shares less than one trading unit 2. Decrease due to sale of fractional shares less than one trading unit
Dividends of which the cut-off date was in the year ended March 31, 2011 and the effective date was in the year ending March 31, 2012
Resolution Type of shares Resources Total of Dividends dividends dividends per share
(Millions of yen) Retained earnings (Yen) March 31, 2011 May 31, 2011
Cut-off date
Effective date
393
25
30
2012 ANNUAL REPORT
13. Supplementary Cash Flow Information The following table represents a reconciliation of cash and bank deposits in the accompanying consolidated balance sheets as of March 31, 2012 and 2011 and cash and cash equivalents in the accompanying consolidated statements of cash flows for the years ended March 31, 2012 and 2011:
2012 2011 2012
For the year ended March 31, 2012, the Group raises funds through short-time deposits, and in consideration of the future capital investment, the Group raises funds through long-term time deposits. The Group uses derivatives for the purpose of reducing risk and does not enter into derivatives for speculative or trading purposes. (b) Types of financial instruments and related risk Trade receivables trade notes and accounts receivable are exposed to credit risk in relation to customers. Investment securities are exposed to market risk. Those securities are composed of mainly the shares of common stock of other companies with which the Company has business relationships. Substantially all trade payables trade notes and accounts payable mostly have payment due dates within four months. Although the Company is exposed to foreign currency exchange risk arising from those payables denominated in foreign currencies, forward foreign exchange contracts, currency swaps and currency options are arranged to reduce the risk. Regarding derivatives, the Company enters into forward foreign exchange contracts, currency swaps and currency options to reduce the foreign currency exchange risk arising from the payables denominated in foreign currencies. Information regarding the method of hedge accounting, hedging instruments and hedged items, hedging policy, and the assessment of the effectiveness of hedging activities is found in Note 1 Summary of Significant Accounting Policies (f) Derivatives and Note 17 Derivative Transactions. (c) Risk management for financial instruments (1) Monitoring of credit risk (the risk that customers or counterparties may default) In accordance with the internal policies of the Company for managing credit risk arising from receivables, each related division monitors credit worthiness of their main customers periodically, and monitors due dates and outstanding balances by individual customer. In addition, the Company is making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties. The Group also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions only with financial institutions which have a sound credit profile. (2) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others) For trade payables denominated in foreign currencies, the Company identifies the foreign currency exchange risk for each currency on a monthly basis and enters into forward foreign exchange contracts, currency swaps and currency options to hedge such risk.
Cash and bank deposits 19,610 18,505 Time deposits with original maturities (370) (365) of more than three months 19,239 18,139 Cash and cash equivalents
$238,741 (4,509) $234,231
14. Amounts per Share Basic net income per share was computed based on the net income available for distribution to shareholders of common stock and the weighted-average number of shares of common stock outstanding during the year, and diluted net income per share was computed based on the net income available for distribution to the shareholders and the weighted-average number of shares of common stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to be issued upon the conversion of convertible bonds and the exercise of warrants. Diluted net income per share for the years ended March 31, 2012 and 2011 has not been presented because there were no potentially dilutive securities at March 31, 2012 and 2011. Amounts per share of net assets were computed based on the net assets available for distribution to the shareholders and the number of shares of common stock outstanding at the year end. Cash dividends per share represent the cash dividends declared as applicable to the respective years together with the interim distributions made.
2012
(yen)
2011
2012
(U.S. dollars)
Net income: Basic Diluted Cash dividends applicable to the year
294.01 86.00 2012

(yen)
283.10 100.00 2011 3,857.83
$3.58 1.05 2012

(U.S. dollars)
Net assets
4,069.17
$49.54
15. Financial Instruments Overview (a) Policy for financial instruments For the year ended March 31, 2011, in consideration of plans for capital investment, the Company and its consolidated subsidiary (collectively, the Group) raise funds through bank borrowings. The Group manages temporary cash surpluses through low-risk financial assets. Further, the Group raises short-term capital through internal funds.
31
For investment securities, the Company periodically reviews the fair values of such financial instruments and the financial position of the issuers. The administration department handles the execution and management of derivative transactions upon approval of the President and CEO. (3) Monitoring of liquidity risk (the risk that the Company may not be able to meet its obligations on scheduled due dates) Based on the report from each division, the Company prepares and updates its cash flow plans on a timely basis to manage liquidity risk. (d) Supplementary explanation of the estimated fair value of financial instruments The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in Note 17 Derivative Transactions are not necessarily indicative of the actual market risk involved in derivative transactions. Estimated Fair Value of Financial Instruments Carrying value of financial instruments on the consolidated balance sheet as of March 31, 2012 and 2011 and estimated fair value are shown in the following table. The following table does not include financial instruments for which fair values are extremely difficult to determine (Please refer to Note 2 below).
As of March 31, 2012 Carrying Estimated value fair value Difference Assets: 1) Cash on hand and in banks 2) Trade notes and accounts receivable 3) Investment securities Total assets Liabilities: 1) Trade notes and accounts payable Derivatives*
(Millions of yen)
As of March 31, 2012 Carrying Estimated fair value Difference value Assets: 1) Cash on hand and in banks 2) Trade notes and accounts receivable 3) Investment securities Total assets Liabilities: 1) Trade notes and accounts payable Derivatives*
$238,741 126,096 31,079 $395,917
$238,741 126,096 31,079 $395,917
$ $
$ (45,238) $ 485
$ (45,238) $ 485
$ $
As of March 31, 2011 Carrying Estimated value fair value Difference Assets: 1) Cash on hand and in banks 2) Trade notes and accounts receivable 3) Investment securities Total assets Liabilities: 1) Trade notes and accounts payable Derivatives*
(Millions of yen)
18,505 9,091 2,182 29,779
18,505 9,091 2,182 29,779
3,338 14
3,338 14
*The value of assets and liabilities arising from derivatives is shown at net value, and with the amount in parentheses representing net liability position. Notes: 1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions (1) Assets Cash on hand and in banks and trade notes and accounts receivable Since these items are settled in a short period of time, their carrying value approximates fair value. Investment securities The fair value of stocks is based on quoted market prices. For information on securities classified by holding purpose, please refer to Note 16 Investment Securities of the notes to the consolidated financial statements. (2) Liabilities Trade notes and accounts payable Since these items are settled in a short period of time, their carrying value approximates fair value. Derivatives transactions Please refer to Note 17 Derivative Transactions of the notes to the consolidated financial statements. 2. Financial instruments for which fair values are extremely difficult to determine March 31, 2012 March 31, 2011 March 31, 2012 (Thousands of U.S. dollars) $913
19,610 10,357 2,552 32,520
19,610 10,357 2,552 32,520
(3,715) 39
(3,715) 39
(Millions of yen) Unlisted stocks 75 75
Because no quoted market price is available and it is extremely difficult to determine the fair value, these financial instruments are not included in the preceding table.
32
2012 ANNUAL REPORT
3. Redemption schedule for receivables with maturities at March 31, 2012 and 2011 As of March 31, 2012 Due in one year or less Cash on hand and in banks Trade notes and accounts receivable Total 19,600 10,357 29,957 Due after one year through five years Due after five years through ten years Due after ten years
As of March 31, 2011 Carrying Acquisition Unrealized value gain (loss) cost Securities whose carrying value exceeds their acquisition cost: Stocks Others Subtotal Securities whose acquisition cost exceeds their carrying value: Stocks Others Subtotal Total
(Millions of yen)
(Millions of yen)
1,020 1,020 1,061 100 1,161 2,182
515 515 1,437 100 1,537 2,052
504 504 (375) (375) 129
As of March 31, 2012 Due in one year or less Cash on hand and in banks Trade notes and accounts receivable Total $238,617 126,096 $364,714 Due after one year through five years $ $ Due after five years through ten years $ $ Due after ten years $ $
(b) Sales of securities classified as other securities and the aggregate gain and loss for the years ended March 31, 2012 and 2011
2012 2011 2012
(Millions of yen)
As of March 31, 2011 Due in one year or less Cash on hand and in banks Trade notes and accounts receivable Total 18,493 9,091 27,585 Due after one year through five years Due after five years through ten years Due after ten years
(Millions of yen)
Sales proceeds Stocks Others Total Aggregate gain Stocks Others Total Aggregate loss Stocks Others Total
175 175 101 101
$ $ $ $ $ $
16. Investment Securities (a) Information regarding securities classified as other securities
As of March 31, 2012 Carrying Acquisition Unrealized gain (loss) value cost Securities whose carrying value exceeds their acquisition cost: Stocks Others Subtotal Securities whose acquisition cost exceeds their carrying value: Stocks Others Subtotal Total
(Millions of yen)
17. Derivative Transactions The notional amounts and the estimated fair value of the derivative instruments outstanding at March 31, 2012 and 2011, for which hedge accounting has been applied, are summarized as follows: (a) Currency-related transactions
As of March 31, 2012 Notional Amount Fair Value Maturing after one year
(Millions of yen)
1,825 100 1,925 627 627 2,552
1,174 100 1,274 778 778 2,052
651 0 651 (150) (150) 500 Deferral hedge accounting Currency swaps, accounted for as part of accounts payable: Buy: USD Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD Allocation method Currency swaps, accounted for as part of accounts payable: Buy: USD (Note 2) Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD (Note 2)
Total
1,819
958
19
As of March 31, 2012 Carrying Acquisition Unrealized value gain (loss) cost Securities whose carrying value exceeds their acquisition cost: Stocks Others Subtotal Securities whose acquisition cost exceeds their carrying value: Stocks Others Subtotal Total
1,828
966
20
$22,221 1,217 23,438 7,640 7,640 $31,079
$14,293 1,217 15,511 9,476 9,476 $24,987
$7,927 0 7,927 (1,835) (1,835) $6,092
115
115
Notes: 1. Calculation of fair value is based on the fair value, etc. presented by counterparty financial institutions, etc. 2. Allocation method are accounted for in combination with accounts payable that are hedged and thus the fair value is included in the fair value of such accounts payable. 3. Currency options, classified as zero cost options, are shown collectively since call options and put options are part of the same contract.
33
As of March 31, 2012 Notional Amount Fair Value Total Deferral hedge accounting Currency swaps, accounted for as part of accounts payable: Buy: USD Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD Allocation method Currency swaps, accounted for as part of accounts payable: Buy: USD (Note 2) Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD (Note 2) Maturing after one year
18. Segment Information Segment information The Company and its consolidated subsidiaries are engaged principally in manufacturing and selling nonwoven fabric and sterilized medical goods, which are considered to be a single business segment. Accordingly, the presentation of information by the reportable segments has been omitted. Related information
$22,150
$11,664
$236
$22,259
$11,768
$248
For the year ended March 31, 2012 (a) Information by products and services
$ 1,404
Sterilization products
Year ended March 31, 2012

Surgicaluse products Medical treatment products Others Total
$ 1,402
(Millions of yen)
Sales to third parties
3,587
27,205
237
842
31,873

Sterilization products Surgicaluse products Medical treatment products Others Total
$43,676 $331,210
$2,895
$10,261
$388,044
As of March 31, 2011 Notional Amount Fair Value Total Deferral hedge accounting Forward foreign exchange contracts, accounted for as part of accounts payable: Buy: USD Currency swaps, accounted for as part of accounts payable: Buy: USD Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD Allocation method Forward foreign exchange contracts, accounted for as part of accounts payable: Buy: USD (Note 2) Currency swaps, accounted for as part of accounts payable: Buy: USD (Note 2) Currency options, accounted for as part of accounts payable: Call options, Buy Put options, Sell: USD (Note 2) Maturing after one year
(Millions of yen)
(b) Information by geographical areas (1) Net sales This information has been omitted since overseas sales are less than 10% of net sales in the consolidated statement of income for the year ended March 31, 2012.
65
(3)
2,831
1,934
(3)
(2) Property, plant and equipment This information has been omitted since property, plant and equipment in Japan exceeds 90% of property, plant and equipment in the consolidated balance sheet as of March 31, 2012. (c) Information by major customers This information has been omitted since there is no customer that represents more than 10% of net sales in the consolidated statement of income for the year ended March 31, 2012. For the year ended March 31, 2011 (a) Information by products and services
Sterilization products Surgicaluse products Medical treatment products (Millions of yen) Others Total
2,761
1,943
21
109
111
3,790
26,550
233
737
31,311
34
2012 ANNUAL REPORT
(b) Information by geographical areas (1) Net sales This information has been omitted since overseas sales are less than 10% of net sales in the consolidated statement of income for the year ended March 31, 2011. (2) Property, plant and equipment This information has been omitted since property, plant and equipment in Japan exceeds 90% of property, plant and equipment in the consolidated balance sheet as of March 31, 2011. (c) Information by major customers This information has been omitted since there is no customer that represents more than 10% of net sales in the consolidated statement of income for the year ended March 31, 2011.
19. Related Party Transactions The information about transactions with related parties has been omitted since there were no significant related party transactions for the years ended March 31, 2012 and 2011. 20. Subsequent Events The information about subsequent events has been omitted since there were no significant subsequent events for the year ended March 31, 2012.
The Board of Directors Hogy Medical Co., Ltd.
Independent Auditors Report
We have audited the accompanying consolidated financial statements of Hogy Medical Co., Ltd. and its consolidated subsidiaries, which comprise the consolidated balance sheet as at March 31, 2012, and the consolidated statements of income, comprehensive income, changes in net assets, and cash flows for the year then ended and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen. Managements Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for designing and operating such internal control as management determines is necessary to enable the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Reponsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to express an opinion on the effectiveness of the entitys internal control, but in making these risk assessments the auditor considers internal controls relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Hogy Medical Co., Ltd. and its consolidated subsidiaries as at March 31, 2012, and their consolidated financial performance and cash flows for the year then ended in conformity with accounting principles generally accepted in Japan. Convenience Translation We have reviewed the translation of these consolidated financial statements into U.S. dollars, presented for the convenience of readers, and, in our opinion, the accompanying consolidated financial statements have been properly translated on the basis described in Note 2.
June 22, 2012 Tokyo, Japan
35
History
1955 1961 1963 1964
1967 1970 1971 1972 1977 1978 1979 1982 1983 1984 1985 1987 1988 1989 1991 1992 1993 1994
1995 1997 1999 2000 2002 2003 2004 2005 2006 2007 2009
2011
Establishment of Hoki Meishodo in Bunkyo Ward, Tokyo by Masao Hoki (Founder of Hogy Medical Co., Ltd.) as a family-type operation, and start of retailing paper and stationery and launch of medical recording paper Incorporation of Hoki Recording Paper Marketing Co., Ltd. in Bunkyo Ward, Tokyo with paid-in capital of 1 million Launch of recording paper for electrocardiograph equipment under the Hogy name Establishment of Nogata Plant in Nerima Ward, Tokyo and start of manufacturing Mekkin Bag (sterilization pouch for surgical instruments) Launch of Mekkin Bag Construction of Kashiwa Plant in Kashiwa City, Chiba and closing of Nogata Plant Change of company name to Hogy Co., Ltd. Establishment of No. 1 Distribution Center in Nagareyama City, Chiba Start of manufacturing and launch of medical use non-woven fabric products Registration with the Governor of Tokyo as business conducting general sales of poisonous and deleterious substances and acquisition of approval to conduct sales of pharmaceutical products Construction of Miho Plant (presently, Miho No. 1 Plant) in Miho Village, Inashiki District, Ibaraki and start of manufacturing Mekkin Bag and non-woven fabric products, taking over Kashiwa Plant operations Renovations of former Kashiwa Plant and establishment of it as No. 2 Distribution Center Start of manufacturing and launch of medical use non-woven fabric products using Sontara (non-woven fabrics) manufactured by E.I. du Pont de Nemours and Company Completion of Miho No. 2 Plant and start of operations as plant exclusively for non-woven fabric products Establishment of No. 3 Distribution Center on adjacent land Launch of OR Pack (surgical drapes pack) Commencement of strategy to market non-woven fabric products through an original complete deployment system Change of company name to Hogy Medical Co., Ltd. Adoption of new computer system as centralized business management and power-saving efforts Establishment of Edosaki Distribution Center (fully-automated warehouse) Listing on Second Section of the Tokyo Stock Exchange Start of operations at Edosaki Sterilization Center (electron beam sterilization) Completion of Miho No. 3 Plant (integrated into Miho No. 2 Plant in April 1994) Acquisition of site for Tsukuba Plant (Minami Okuhara Industrial Park) Completion of expansion work on Edosaki Distribution Center and integration with No. 1 Distribution Center Launch of kit products Incorporation of P.T. Hogy Indonesia (presently, a consolidated subsidiary) Completion of building for Tokyo Sales Office Completion of Tsukuba Sterilization Center (fully-automated electron beam sterilization) Completion of Tsukuba Distribution Center (fully-automated warehouse) Launch of steel surgical instruments Change of listing to First Section of the Tokyo Stock Exchange Completion of building for new Head Office Relocated Head Office to current location (Minato Ward, Tokyo) Completion of Tsukuba Kit Plant and start of operations as plant exclusively for kit products Launch of Opera Master Product Start of operations of production line exclusively for Opera Master at Tsukuba Plant Tsukuba OPC commenced its operations P.T. Hogy became sub-subsidiary (included in consolidation; name changed from P.T. Nitto Matex Indonesia in February 2008) P. T. Hogy merged into P.T. Hogy Indonesia Marketing surgery management system Completion of P.T. Hogy Indonesia Pack-Kit Plant 50th Anniversary P. T. Hogy Medical Sales Indonesia incorporated (as a subsidiary of P.T. Hogy Indonesia)
36
2012 ANNUAL REPORT
Shareholder Information
Common stock price range & trading volume

()
Closing Highest (upper whisker) Opening
8,000 7,000 6,000 5,000 4,000 3,000

(Million shares)
Opening (lower whisker) Lowest Closing
2 1 2008 2009 2010 2011 2012 0
2008
2009
2010
2011
2012
High (yen) Low (yen) Major shareholders
6,230 4,160
6,260 4,350
5,510 4,290
4,770 3,035
3,700 3,010
Unique to Japan, the box-andwhisker chart shows monthly price movements and turnover. A single box contains opening, closing, high and low quotations on a monthly basis which enables the reader to quickly see price movements. If the box is white, it means that the closing price of the month is higher than the opening price and if the box is blue, the opposite has occurred. The box also changes shape. If the opening quotation is the same as the low for the month and the closing quotation is the same as the high for the month, a whisker does not appear from the white box. These are but two examples of this excellent charting method. Numbers shown in the chart represent the highest and the lowest prices throughout the period. A bar graph at the foot of the chart indicates the monthly turnover in units of one million shares.
Number of shares
Masao
Percentage of total (%)
Hoki Trust Company (AVFC) Sub Account American Client Permanent representative: The Hongkong and Shanghai Banking Corporation Limited Tokyo Branch Japan Trustee Services Bank, Ltd. (Trust Account) Hoki Business Limited The Master Trust Bank of Japan, Ltd. (Trust Account) Trust & Custody Services Bank, Ltd. (Pension Fund Trust) Mellon Bank, N.A. As Agent For Its Client Mellon Omunibus US Pension (Permanent representative: Mizuho Corporate Bank, Ltd., Settlement & Clearing Services Division) Japan Trustee Services Bank, Ltd. (Trust Account 9) Northern Trust Co AVFC Re Northern Trust Guernsey Irish Clients (Permanent representative: The Hongkong and Shanghai Banking Corporation Limited Tokyo Branch) Medipal Holdings Corporation
Northern
2,727,073 810,600 806,700 767,724 579,200 539,100 428,800 383,900 312,300 292,000
16.68 4.96 4.93 4.69 3.54 3.29 2.62 2.34 1.91 1.78
Our company owns 611,220 treasury stock. (As of March 31, 2012)
Shareholder composition
Number of shareholders Number of shares (thousands) Proportion (%)
Individuals Financial institutions Financial products trading firms Foreign investors and others Others (corporate and treasury stock) Total
7,118 37 34 147 98 7,434
5,617.9 3,823.2 157.4 4,729.5 2,013.0 16,341.1
34.38 23.40 0.96 28.94 12.32 100.00
37
Corporate Information
Board of Directors, Corporate Auditors and Executive Officers
President & CEO
Jun-ichi Hoki
Directors
Jun-ichi Hoki
Yukio Yamamoto
Kazuo Takahashi
Yukio Yamamoto Kazuo Takahashi Hitoshi Fujioka Satoshi Maeda Katsumi Uchida
(Sales Div.) (Administration Dept.) (Research & Development Dept.) (Production Div.)
Outside Board Member Full-time Corporate Auditor
Yukikazu Mishima
Outside Corporate Auditors
Shigeru Yasuda Shuji Yanase
Hitoshi Fujioka
Satoshi Maeda
Katsumi Uchida
Executive Officers
Takuya Kobayashi Naoki Matsumoto Katsuo Sasaki Ikuo Fuse Ken-ichi Yamaoka Yoshio Jo
(Sales Dept. 1) (Sales Dept. 2) (Sales Dept. 4) (Sales Administration Dept.) (Procurement Dept.) (Research & Development Dept.)
(as of June 22, 2012)
Yukikazu Mishima
Shigeru Yasuda
Shuji Yanase
Corporate Data
Incorporated:
Code number:
Transfer agent:
April 3, 1961
Paid-in capital:
3593
Number of shareholders:
7,123 million
Number of employees:
7,434
Shares of common stock issued and outstanding:
1,441 (Consolidated)
Number of sales offices:
Mitsubishi UFJ Trust and Banking Corporation Corporate Agency Division 10-11 Higashisuna 7-chome, Koto-ku, Tokyo, 137-8081 Tel: 0120-232-711
Independent auditor:
16,341,155
Financial year:
24
Listing:
April 1 to March 31
Annual general meeting: June
The Tokyo Stock Exchange First Section
Ernst & Young ShinNihon Hibiya Kokusai Building, 2-3, Uchisaiwai-cho 2-chome, Chiyoda-ku, Tokyo 100-0011 Tel: 03-3503-1100
(as of March 31, 2012)
38
2012 ANNUAL REPORT
Network (As of July 1, 2012)
Head Office 7-7, Akasaka 2-chome, Minato-ku, Tokyo 107-8615 Phone: +(81)3-6229-1300 Fax: +(81)3-6229-1350
http://www.hogy.co.jp
Sales Offices
Sapporo Sales Office 1-1, Higashi 19-chome, Kita 26-jo, Higashi-ku, Sapporo-shi, Hokkaido 065-0026 Phone: +(81)11-783-2401 Fax: +(81)11-783-2460 Morioka Sales Office 14-50, Mitake 4-chome, Morioka-shi, Iwate 020-0122 Phone: +(81)19-641-1221 Fax: +(81)19-641-1383 Sendai Sales Office 1, Okadanishimachi 3-chome, Miyagino-ku, Sendai-shi, Miyagi 983-0004 Phone: +(81)22-287-5333 Fax: +(81)22-287-5335 Utsunomiya Sales Office 13-46, Futaba 1-chome, Utsunomiya-shi, Tochigi 321-0164 Phone: +(81)28-684-1715 Fax: +(81)28-658-6164 Omiya Sales Office 8-9, Higashi-omiya 6-chome, Minuma-ku, Saitama-shi, Saitama 337-0051 Phone: +(81)48-684-8591 Fax: +(81)48-684-8590 Chiba Sales Office 12-12, Tsuga 2-chome, Wakaba-ku, Chiba-shi, Chiba 264-0025 Phone: +(81)43-232-1411 Fax: +(81)43-232-1285 Tokyo Sales Office 20-9, Hongo 3-chome, Bunkyo-ku, Tokyo 113-0033 Phone: +(81)3-3813-8141 Fax: +(81)3-3813-8140 Tama Sales Office 49-16, Tokura 4-chome, Kokubunji-shi, Tokyo 185-0003 Phone: +(81)42-320-5511 Fax: +(81)42-320-5513 Yokohama Sales Office 482-1, Toriyama-cho, Kohoku-ku, Yokohama-shi, Kanagawa 222-0035 Phone: +(81)45-471-7701 Fax: +(81)45-471-7704 Niigata Sales Office 9-3, Bentenbashi-dori 3-chome, Chuo-ku Niigata-shi, Niigata 950-0925 Phone: +(81)25-287-7110 Fax: +(81)25-287-7116 Kanazawa Sales Office 1-16-22, Ekinishi-shinmachi, Kanazawa-shi, Ishikawa 920-0027 Phone: +(81)76-223-2351 Fax: +(81)76-223-5505 Shizuoka Sales Office 241 Mise, Suruga-ku, Shizuoka-shi, Shizuoka 422-8057 Phone: +(81)54-284-6688 Fax: +(81)54-284-6855 Matsumoto Sales Office 2-10-7, Muraimachi-minami, Matsumoto-shi, Nagano 399-0036 Phone: +(81)263-85-3280 Fax: +(81)263-86-7847 Nagoya Sales Office 1-508, Bunkyodai, Meito-ku, Nagoya-shi, Aichi 465-0012 Phone: +(81)52-778-2711 Fax: +(81)52-778-2720 Kyoto Sales Office 20-2, Kamitoba-waranden, Minami-ku, Kyoto-shi, Kyoto 601-8133 Phone: +(81)75-672-1441 Fax: +(81)75-671-9330 Osaka Sales Office 14-17, Nishiawaji 1-chome, Higashiyodogawa-ku, Osaka-shi, Osaka 533-0031 Phone: +(81)6-6320-7211 Fax: +(81)6-6320-7216 Nara Sales Office 70-1, Hokkeji-cho, Nara-shi, Nara 630-8001 Phone: +(81)742-32-2811 Fax: +(81)742-32-2812 Kobe Sales Office 2-15, Ekimae-dori, 2-chome, Hyogo-ku, Kobe-shi, Hyogo 652-0898 Phone: +(81)78-579-8611 Fax: +(81)78-579-8612 Okayama Sales Office 6-28, Okudanishimachi, Kita-ku, Okayama-shi, Okayama 700-0931 Phone: +(81)86-803-2007 Fax: +(81)86-803-2005 Hiroshima Sales Office 17-23, Nakasuji 2-chome, Asaminami-ku, Hiroshima-shi, Hiroshima 731-0122 Phone: +(81)82-879-3901 Fax: +(81)82-879-3903 Matsuyama Sales Office 1188-1, Kishimachi, Matsuyama-shi, Ehime 791-1102 Phone: +(81)89-976-2021 Fax: +(81)89-976-1822 Fukuoka Sales Office 22-22, Toko 2-chome, Hakata-ku, Fukuoka-shi, Fukuoka 812-0008 Phone: +(81)92-475-1861 Fax: +(81)92-475-1864 Kumamoto Sales Office 107-12 Koga, Mashikimachi, Kamimashiki-gun, Kumamoto 861-2234 Phone: +(81)96-286-1331 Fax: +(81)96-286-1425 Kagoshima Sales Office 3-1, Gionnosu-cho, Kagoshima-shi, Kagoshima 892-0803 Phone: +(81)99-248-5040 Fax: +(81)99-247-2330
Facilities
Tsukuba Plant 1650-30, Okubara-cho, Ushiku-shi, Ibaraki 300-1283 Kit Plant Phone: +(81)29-830-9700 Fax: +(81)29-830-9710 Sterilization Center Phone: +(81)29-830-9725 Fax: +(81)29-830-9726 Distribution Center Phone: +(81)29-830-9100 Fax: +(81)29-830-9101 OPC Phone: +(81)29-830-9735 Fax: +(81)29-830-9736 Miho Plant No.1 1873-1 Fusa, Miho-mura, Inashiki-gun, Ibaraki 300-0427 Phone: +(81)29-885-2981 Fax: +(81)29-885-6800 Miho Plant No.2 1776-1 Fusa, Miho-mura, Inashiki-gun, Ibaraki 300-0427 Phone: +(81)29-885-6611 Fax: +(81)29-885-6800 Edosaki 2726-1, Tatenodai, Sakura, Inashiki-shi, Ibaraki 300-0508 Distribution Center Phone: +(81)29-892-2381 Fax: +(81)29-892-0891 Sterilization Center Phone: +(81)29-892-5300 Fax: +(81)29-892-5221
Overseas Subsidiaries
P.T. Hogy Indonesia MM2100 Industrial Town, EPZ., Block M-3-1, Cikarang Barat, Bekasi 17520, West Java, Indonesia P.T. Hogy Medical Sales Indonesia Wisma Keiai Prince 19th fl, Jl.. Jend. Sudirman Kav.3, Jakarta 10220-Indonesia
39
Printed in Japan

Hogy Fy2012 Ar

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Hogy Fy2012 Ar

Încărcat de

Drepturi de autor:

Formate disponibile

For the Year ended March 31, 2012

Toward Another 50 Years, Pursue Further Enhancement of Corporate Value

Financial Highlights (Consolidated)

Years ended March 31,

(Millions of yen unless indicated otherwise)

31,873 7,750 7,822 4,624

31,311 8,601 7,475 4,453

388,044 94,352 95,232 56,303

7,123 8,336 64,013 72,522 29,585

7,123 8,336 60,698 69,834 31,518

86,721 101,486 779,321 882,910 360,180

6,278 (2,810) (2,310) 19,239

7,250 (3,888) (2,545) 18,139

76,436 (34,219) (28,123) 234,231

35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Net sales Ordinary income

To Our Shareholders and Investors

Fiscal 2011 Sales Growth by Major Products

Fiscal 2011 sales growth 562 million

2012 ANNUAL REPORT

Chairman Emeritus & Founder

To Our Shareholders and Investors

2012 ANNUAL REPORT

Sales of Opera Master

By Reinforcing Seminars, Further Promote the Opera Master Strategy

FY 11 contracts FY 08 contracts FY 05 contracts

FY 10 contracts FY 07 contracts FY 04 contracts

By Accelerating the Renewal of Products, Further Reinforce the Surrem Strategy

To Our Shareholders and Investors

New Sterilization Center in Operation Since May 2011

New sterilization center on the Tsukuba Plant site

With Indonesia as a Manufacturing Base, Reinforce Sales to Overseas Markets

P.T. Hogy Indonesia Plant

2012 ANNUAL REPORT

Corporate Governance and Internal Control System

Overview of the Current Corporate Governance System

Internal Control System Basic Approach and Maintenance Status

2012 ANNUAL REPORT

General Meeting of Shareholders

Election and dismissal

Election and dismissal Audit

Board of Corporate Auditors

1 auditor, 2 outside auditors

Independent Accounting Auditor

Instruction and supervision

Report Management meeting

Instruction and supervision

Directors, Executive Officers

Committee Over Internal Controls

Internal Auditing Department

Instruction and supervision

Company Divisions and Group Companies

Summary of Business by Mainstay Product

Concept of the Opera Master Strategy

Information management system

2012 ANNUAL REPORT

Opera Masters New Service Surgery Management System

Proposing operating room management that is one step ahead

Setting goal and drawing plan

Business efficiency improvement through tools

Management review and improvement

Inspection and evaluation

Data collection and analysis

Concept of the Surrem Strategy