77th Fiscal Year Shareholders’ Report Fiscal Year Shareholders' Report.pdf · 77th Fiscal Year Shareholders’ Report ... plan as “We will achieve a balance between ‘Innovation

(TRANSLATION FOR REFERENCE PURPOSES ONLY)

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77th Fiscal Year Shareholders’ Report

For the term beginning April 1, 2011 and ending March 31, 2012

Attachment to the Notice of the 77th Ordinary General Meeting of Shareholders

AIDA ENGINEERING, LTD. ________________________________________________________________________________ Note: This document has been translated from the Japanese original for reference purposes only. In

the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.


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Contents

� President Message 3

Attachment to the Notice of the 77th Ordinary General Meeting of Shareholders

� Business Report 4 � Consolidated Balance Sheet 24 � Consolidated Statement of Income 26 � Consolidated Statement of Changes in Net Assets 27 � Table of Notes to Consolidated Financial Statements 29 � Non-consolidated Balance Sheet 39 � Non-consolidated Statement of Income 41

� Non Consolidated Statement of Changes in Net Assets 42 � Table of Individual Notes 45 � Audit Report of Independent Accounting Auditors regarding 51

The Consolidated Financial Statements � Audit Report of Independent Accounting Auditors 52 � Audit Report of the Board of Statutory Auditors 53

<References> � Topics 55 � Profiles of the Company’s Main Facilities 56 � Information for the Shareholders 62


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President Message

Dear Shareholders:

I appreciate for your particular support and kind consideration.

I take pleasure in putting the 77th (from April 1, 2011 to March 31,

2012) report into your hand.

With the order situation being on a track to recovery mainly due to that in emerging countries, AIDA

Group has achieved growth both in sales and profit, by steadily carrying out our medium-term

management plan commencing on the 77th fiscal year.

But we do not feel optimistic about our business environment in consideration of fiercer competition in

global market.

We will advance as an entire team to deal with the harsh business environment and to achieve the

target of the new medium-term management plan.

I ask to have with your continued more cooperation and encouragement.

June, 2012

Kimikazu Aida President & CEO

AIDA ENGINEERING, LTD.


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Business Report (April 1, 2011 through March 31, 2012)

1. Matters Related to the Current Circumstances of the Consolidated Group

(1) Developments and results of business

During this consolidated fiscal year, there was a gradual trend towards recovery in the global economy while concerns over economy slowdown continued against European sovereign debt crisis. Japanese economy had been deeply impacted by the Great East Japan Earthquake and Tsunami as well as yen’s sharp appreciation, but supply chain made steady strides toward restoration, the business conditions have been on track to recovery.

In the press machine manufacturing industry, orders delivered to Japan increased mainly from

automotive related industry, and also those from the Americas and East-South Asian market

jumped up despite a prolonged strong yen. As a result, the amount of orders intake has been

increased by 17.9% from the previous year to ¥180,582 billion. (source: Japan Forming

Machinery Association, amount of orders intake regarding machinery concerning presses).

Under this business environment, the AIDA ENGINEERING Group has launched a New

Medium-Term Management Plan (3 years plan) commencing in FY 2012. With the slogan of this

plan as “We will achieve a balance between ‘Innovation as a forming systems builder’ and

‘Continued sustainable growth as a global company’ and will expand as a corporate group that is

trusted by society”, we have addressed our key policies of “Creating Customers” and

“Increasing Value-added Content”. In this consolidated fiscal year, we enhanced production

capacity of our Asian bases on the background of continuing demand expansion in this market,

including start-up of new facility in China and expansion of the Malaysia facility. As for the

product development, we have focused on technological evolution of servo and endeavored to

develop product line-ups of servo press such as commercializing “DSF-P series”,

These results showed that orders intake for the consolidated fiscal year 2012 increased by 21.1%

year-on-year to ¥58.021 billion due to higher orders from Japanese and European automotive

industries generating new users, and net sales increased by 27.4% to ¥52.24 billion.

Mainly due to higher sales effect, operating income increased by 52.0% to ¥2.221 billion,

ordinary profit showed ¥3.021 billion, up 177.5% from the previous year posting a gain on

maturity redemption of endowment insurance. Net income increased by 131.5% to ¥2.842 billion.


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■ Consolidated Order Amount ■ Consolidated Sales Amount

（millions of yen）（millions of yen）

■ Consolidated Operating Income ■ Consolidated Ordinary Income

（millions of yen）（millions of yen）

■ Consolidated Net Income （millions of yen）

47,924

58,021

33,403

40,883

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

74th 75th 76th 77th

40,989

52,240

34,898

60,675

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

74th 75th 76th 77th

1,461

2,221

-5,529

955

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

74th 75th 76th 77th

1,103

-5,414

3,021

1,088

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

74th 75th 76th 77th

1,228

2,842

-12,090

810

-13,000

-11,000

-9,000

-7,000

-5,000

-3,000

-1,000

1,000

3,000

74th 75th 76th 77th


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(2) Summary of financial results by operating division

Orders Intake Sales

Category Amount (millions of yen)

Annual increase

(decrease) (%)

Ratio (%)

Amount (millions of yen)

Annual increase

(decrease) (%)

Ratio (%)

Press machines

47,052 19.7 81.1 41,574 27.6 79.6

Services 10,679 29.2 18.4 10,483 30.4 20.1 Others 289 △19.7 0.5 181 △50.7 0.3

Total 58,021 21.1 100.0 52,240 27.4 100.0

a. Press machines

Demand from automotive industry were strong, particularly in emerging countries, order amount

recorded ¥47.052 billion (increased by 19.7% from the previous fiscal year). And total sales

increased by 27.6% to ¥41.574 billion.

b. Service

Due to works including large-scale relocation and demand for repair after flood disaster in

Thailand, the orders amount of the Service business increased by 29.2% from the previous fiscal

year to ¥10.679 billion, and the sales amount increased by 30.4% to 10.483 billion.

c. Other

The orders amount of the other business decreased by 19.7% from the previous fiscal year to

¥0.289 billion, and the sales amount decreased by 50.7% to ¥0.181 billion.

(3) Capital investment

The amount of capital investment during the fiscal year was ¥2.667 billion in total, which

included a start-up and expansion of overseas factories, as well as additional processing

machinery to a factory in our foreign subsidiaries.

(4) Financing activities

There were no material borrowings and issuance of new shares and debentures during the fiscal

year 2012.

(5) Tasks ahead

Due to steady performance of capital expenditure in automotive related industry mainly for

emerging countries, order intake has been on the increase. But the sense of uncertainty regarding

Orders

Pressmachines,

81.1%

Service,18.4% Others, 0.5%

Sales

Pressmachines,

79.6%

Others, 0.3%Service,

20.1%


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the future of the economy continues to linger, as there are fears that economic growth in

emerging countries will decelerate and effect of European sovereign debt crisis could last long.

Moreover, in light of prolonged yen appreciation and uncertainty concerning the supply of

electricity in Japan, business conditions surrounding our group will continue to be difficult.

In these circumstances, AIDA ENGINEERING Group will work to enhance our business base and ensure profitability implementing steadily each measure specified in the mid-term management plan.

(6) Changes in consolidated assets and financial profit-and-loss status of the Group

Category

74th fiscal year

April 1, 2008 to March 31, 2009

75th fiscal year

April 1, 2009 to March 31, 2010

76th fiscal year

April 1, 2010 to March 31, 2011

77th fiscal year (current term)

April 1, 2011 to March 31, 2012

Orders (millions of yen) 40,883 33,403 47,924 58,021

Sales (millions of yen) 60,675 34,898 40,989 52,240

Operating income/loss (millions of yen)

955 -5,529 1,461 2,221

Ordinary profit / loss (millions of yen)

1,103 -5,414 1,088 3,021

Net income / loss (millions of yen)

810 -12,090 1,228 2,842

Earnings per share( yen) 12.41 -189.36 19.44 46.90

Net assets (millions of yen) 57,869 45,706 45,216 47,472

Total assets (millions of yen) 74,796 63,867 67,342 71,300 Notes: Earnings per share calculated by dividing net income/loss by the average number of shares

during the period (the average number of the issued shares during period except one of treasury stock).

(7) Principal business (as of March 31, 2012)

Principal business of the Group are manufacturing and sales of metal foaming machines mainly press machines, various auxiliary automatic devices, industrial robots and tooling dies, as well as service operations.

(8) Principal offices and plants (as of March 31, 2012)

1) Major offices and plants of the Company - Head office: Midori-ku, Sagamihara, Kanagawa - Sales offices:

Oyama (Oyama, Tochigi) Takasaki (Takasaki, Gunma) Kanagawa (Midori-ku, Sagamihara, Kanagawa)

Nagano (Shimosuwa-machi, Suwa-gun, Nagano)

Hamamatsu (Naka-ku, Hamamatsu, Shizuoka)

Chubu (Anjo, Aichi)

Osaka (Kadoma, Osaka) Chugoku/Shikoku (Fukuyama, Hiroshima)

Fukuoka (Hakata-ku, Fukuoka, Fukuoka)

- Plants: Sagami main plant, Tsukui plant, and Shimokuzawa plant (Midori-ku, Sagamihara, Kanagawa) Hakusan plant (Hakusan, Ishikawa)


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2) Establishments of principal subsidiaries

Name of subsidiary Location of Head office Location of Plant(s) ACCESS LTD. Hakusan, Ishikawa Hakusan, Ishikawa

AIDA AMERICA CORP. Ohio, USA Ohio, USA

AIDA S.r.l. Brescia, Italy Brescia, Italy

AIDA GREATER ASIA PTE. LTD.

Singapore

AIDA ENGINEERING (M) SDN.BHD.

Johor, Malaysia Johor, Malaysia

AIDA HONG KONG LTD. Hong Kong

AIDA ENGINEERING CHINA CO., LTD.

Shanghai, China

AIDA PRESS MACHINERY SYSTEMS CO., LTD.

Nantong, Province of Jiangsu, China

Nantong, Province of Jiangsu, China

(9) Status of principal subsidiaries

1) Status of principal subsidiaries

Name of subsidiary Capital

Ratio of voting rights owned by the

Company (%)

Principal business

ACCESS LTD. JPY 50 million 100

Manufacture and sale of electronic controls and automation device systems

AIDA AMERICA CORP. USD 42,102 thousand 100 Manufacture, sale and service of press machines

AIDA S.r.l. EUR 24,000 thousand 100 Manufacture, sale and service of press machines

AIDA GREATER ASIA PTE. LTD.

SGD 300 thousand 100 Sale and service of press machines

AIDA ENGINEERING (M) SDN. BHD.

RM 64,842 thousand (Note) 100 Manufacture and sale of press machines.

AIDA HONG KONG LTD. HKD 660 thousand 100 Sale and service of press machines

AIDA ENGINEERING CHINA CO., LTD.

RMB 168,857 thousand (Note) 100 Sale and service of press machines

AIDA PRESS MACHINERY SYSTEMS CO., LTD.

RMB 111,547 thousand (Note) 100 Manufacture and sale of press machines.

Notes: 1. The ratio of voting rights above includes the percentage of indirect shareholding by subsidiaries. 2. Production capabilities of press machines in AIDA ENGINEERING CHINA CO., LTD. were

transferred to AIDA PRESS MACHINERY SYSTEMS CO., LTD. in this fiscal year.

2) Other principal status on business combination None to be mentioned.

3) Progress of business combination None to be mentioned.

4) Results of business combination The Company has 19 consolidated subsidiaries. The results of the Group for this fiscal year are described at 1. (1)” Developments and results of business” above.

(10) Employee status (as of March 31, 2012)

Number of employees Increase (decrease) over the previous year

1,566 +88


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(11) Major lenders (As of March 31, 2012)

(12) Status of transfer of business, assimilative-divisive reorganization or formational-

divisive reorganization

None to be mentioned. (13) Status of acquisition of other company's business

None to be mentioned.

(14) Status of succession of rights and obligations for other company's business due to

merger or assimilative-divisive reorganization


(15) Status of acquisition or disposal of other company's shares and other interests or stock

acquisition rights


(16) Other important matters concerning the current status of the Consolidated Group


Lender Amount (millions of yen)

Mizuho Corporate Bank, Ltd. 548

The Dai-Ichi Life Insurance Company, Ltd. 500

Nippon Life Insurance Company 500

Meiji Yasuda Life Insurance Company 500


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2. Matters relating to shares of the Company (as of March 31, 2012)

(1) Total number of shares authorized to be issued: 188,149,000 shares (2) Total number of shares issued and outstanding: 79,147,321 shares (including treasury

stock of 15,091,681 shares) (3) Number of shareholders: 7,515

(4) Major Shareholders Investment by

these shareholders in the Company

Name of Shareholders Number of

Shares Held (thousands)

Shareholding Ratio (%)

The Dai-Ichi Life Insurance Company, Ltd. 4,000 6.24

Nippon Life Insurance Company 3,725 5.82

Japan Trustee Services Bank, Ltd.(trust account) 3,417 5.34

Trust & Custody Services Bank, Ltd. (‘E’ trust account) 3,397 5.30

Meiji Yasuda Life Insurance Company 2,516 3.93

The Master Trust Bank of Japan, Ltd. (trust account) 2,488 3.88

Mizuho Corporate Bank, Ltd. 2,179 3.40

The Bank of New York, Treaty Jasdec Account 2,022 3.16

Kimikazu Aida 1,433 2.24

CBNY DFA Intl Small Cap Value Portfolio 1,132 1.77

Notes: 1. The shareholding ratio above is calculated based on the number of the shares (64,055,640 shares), which is computed by subtracting the number of treasury stock from one of the issued shares.

2. Trust & Custody Services Bank, Ltd. (Trust Account E) is the re-entrustee in the Stock Granting Trust (J-

ESOP).

(5) Other important matters relating to shares


3. Matters Relating to Stock Acquisition Rights of the Company

(1) Status of stock acquisition rights as of the last day of the fiscal year 2012

Status of stock acquisition rights granted to the Company officers in consideration of the execution of their duties.

1) Status of stock acquisition rights held by directors (except outside directors)

Date of resolution for

issuance

(the Board of

Directors)

Number

of stock

acquisiti

on rights

Class and

number of

shares subject to

stock acquisition

rights

Exercise

price

(yen)

Number

of

directors Exercise period

March 24, 2003 10

Note 1

Common stock

10,000 304 2

From July 1, 2004 to

March 31, 2012

January 29, 2004 94 Common stock

94,000 388 4


March 31, 2013


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February 10, 2005 95 Common stock

95,000 563 6


March 31, 2014

September 30, 2005 49 Common stock

49,000 725 6


March 31, 2015

September 10, 2007 15

Note 2

Common stock

15,000 1 2

From September 27, 2007

to September 26, 2037


Note 2

Common stock

25,000 1 4




Note 2

Common stock

59,000 1 4




Note 2

Common stock

55,000 1 4




Note 2

Common stock

49,000 1 6



Notes:1. The exercise period of the stock acquisition rights has ended at March 31, 2012.

2. The stock acquisition rights concerned are ones to be granted as stock option of stocks reward

type in place of the retirement benefit plan for directors.

2) Stock acquisition rights held by outside directors None to be mentioned.

3) Stock acquisition rights held by auditors


(2) Stock acquisition rights issued during the fiscal year 2012 to Employees of the

Company, Directors and Employees of the Subsidiaries of the Company


(3) Other important matters relating to stock acquisition rights



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4. Officers of the Company

(1) Directors and auditors (as of March 31, 2012)

Position in the Company Name Responsibility and concurrent holding of

important positions

President and Representative Director Kimikazu Aida

Chief Executive Officer (CEO), Division Manager, Research & Development Headquarters

Director Naoyoshi Nakanishi

Vice President, Chief Operating Officer (COO), Head of GCS Promotion Office, Chairman, Representative Director of Access Ltd., Chairman of AIDA ENGINEERING (M) SDN. BHD. Chairman of AIDA PRESS MACHINERY SYSTEMS CO., LTD.

Director Eiji Takei Senior Executive Officer, Chairman of AIDA AMERICA CORP. Chairman & CEO of AIDA S.r.l.,

Director Takashi Yagi Operating Officer, Deputy Division Manager, Sales & Customer Service Headquarters

Director Sadayuki Kanemura Operating Officer, Division Manager, Sales & Customer Service Headquarters

Director Hiromichi Kataoka

Operating Officer, Chief Financial Officer (CFO), Division Manger, General Administration Division

Director Hiroo Wakabayashi Statutory Auditor, CMK Corporation

Director Takeru Yamazaki

Standing Statutory Auditor Shigeo Matsumoto

Statutory Auditor Yoshihiro Masuoka Attorney at Law, Head of Masuoka & Aota Law Office

Statutory Auditor Kimio Oiso President of the Cardiovascular Institute

Notes: 1. Hiroo Wakabayashi and Takeru Yamazaki are the outside directors 2. Each of the above auditors is an outside auditor. 3. The outside directors and outside auditors are reported to the Tokyo Stock Exchange

as independent officers. 4. Shigeo Matsumoto, Auditor, has engaged in internal audit business in a major

commercial bank, Yoshihiro Masuoka, Auditor, is an attorney at law, and Kimio Oiso has engaged in loan and credit business in a life insurance company. Thus all these auditors have an extensive knowledge regarding financial and accounting affairs.

5. Sadayuki Kanemura and Hiromichi Kataoka were elected as directors at the 76th General Shareholders’ Meeting held on June 29, 2011, and came into office.

6. Takao Mikoshiba was elected as an alternate statutory auditor specified in Article 329, Paragraph 2 of the Company law in order to fill a deficiency in the number of Statutory Auditors caused for any reason.

7. Eiji Takei, Director, took up a post as Chairman of the Board and Managing Director


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of AIDA HONG KONG, LTD. on April 1, 2012.

8. The Company’s officers that retied during this fiscal year are as follows. Position in the Company at retirement

Name Responsibility and concurrent holding of important positions at retirement

Date of retirement

Reason for retirement

Director Nobuyoshi Maeda

- June 29, 2011

Retirement upon expiration of the term

Director Masaharu Sakaki

- December 26, 2011

Retirement upon resignation

(2) Status of outside officers (as of March 31, 2012)

1) Concurrent holding of important positions as an operating officer of another company

・ Yoshihiro Masuoka, Auditor: Head of Masuoka & Aota Law Office;

The Company does not have any important business connection with the above law office.

・ Kimio Oiso, Auditor:, President of the Cardiovascular Institute

The Company does not have any important business connection with the above foundation.

The followings are not applied to the case above, but they serve in the dual roles as follows.

・ Yoshihiro Masuoka, Auditor: Executive Director of the Board, Meikai University; Executive

Director of the Board, Asahi University. The Company does not have any important business connection with the above universities.

・ Shigeo Matsumoto, Standing Statutory Auditor: He had been a committee member of Committee to Discuss Common Threat Analysis and Incident Response Exercise in the National Information Security Center, and left his office on March 30, 2012. The Company does not have any important business connection with the above Center.

2) Concurrent holding of important positions as an outside officer of another company

・ Hiroo Wakabayashi, Director, concurrently serves as an outside auditor of CMK

Corporation.CMK Corporation is a customer of the Company. 3) Activities during the fiscal year 2012

Position in the Company Name Activities during the fiscal year 2012

Director Hiroo Wakabayashi

Attended 10out of 11 meetings of the board of directors held during the fiscal year 2012 and made comments from time to time from the standpoints of a former officer of a life insurance company.

Director Takeru Yamazaki

Attended all 11 meetings of the board of directors held after his appointment of a director during the fiscal year 2012 and made comments from time to time from the standpoint of a former officer of a major commercial bank.


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Standing Statutory Auditor Shigeo Matsumoto

Attended all 11 meetings of the board of directors and all 9 meetings of the board of auditors held after his appointment of a standing statutory auditor during the fiscal year 2012 and made comments from time to time from the standpoint of a former officer of a major commercial bank.

Statutory Auditor Yoshihiro Masuoka

Attended 9 out of 11meetings of the board of directors and 8 out of 9 meetings of the board of auditors held during the fiscal year 2012 and made comments from time to time from the standpoint of an attorney at law and a chief executive officer of universities.

Statutory Auditor Kimio Oiso

Attended all 11 meetings of the board of directors and all 9 meetings of the board of auditors held during the fiscal year 2012 as a statutory auditor and made comments from time to time from the standpoint of a former officer of a life insurance company.

4) Summary of liability limitation agreement

The Company has entered into an agreement with each outside officer in accordance with the articles of incorporation that the liability for damage as set forth in paragraph 1 of article 423 of the Corporation Law shall be limited to the aggregate of the amount stipulated in each item of paragraph 1 of article 425 of the said Law.


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(3) Remuneration for Directors and Auditors

Category Number

of officers

Basic

remuneration

Stock

acquisition

rights

Bonus Total

amount

Director (excluding Outside Director) 8 ¥90 million ¥19 million ¥43 million ¥153 million

Outside Director 2 ¥16 million - - ¥16 million

Statutory Auditor

(Each of the auditors is an outside auditor) 3 ¥23 million - - ¥23 million

Notes: 1. The remuneration above includes an amount for one director who retired at the conclusion

of the 76th Ordinary General Shareholders' Meeting held on June 29, 2011 and one director

who resigned on December 26, 2011.

2. Bonus is the amount transferred as “provision for bonuses for directors”.

3. In addition to the remuneration above, the Company paid 2 million for one director who

retired at the 76th Ordinary General Shareholders’ Meeting and 7 million for one director

who resigned on December 26, 2011, as the payment of accrued benefits associated with

abolition of officer’s retirement benefit system based on the resolution of the 72nd General

Shareholders’ Meeting held on June 28, 2007.

4. Furthermore, the Company paid ¥106 million, which was the amount corresponding to the

salary and bonus as an employee for 7 of those who are both employees and directors.

5. The maximum amount of remuneration paid to directors in accordance with a resolution

approved at a meeting of general shareholders is ¥300 million per annum (exclusive of the

amount paid as employee's salary to those who are both employees and directors).

(Resolution of the 66th Ordinary General Shareholders' Meeting held on June 28, 2001)

6. In addition to the maximum amount of remuneration paid to directors described above, the

maximum amount of remuneration concerned with the stock acquisition rights as the stock

option for directors (except the outside director) is ¥35 million per annum.

(Resolution of the 72nd Ordinary General Shareholders' Meeting held on June 28, 2007)

7. The maximum amount of remuneration paid to Auditors in accordance with a resolution

approved at a meeting of general shareholders is ¥50 million per annum.

(Resolution of the 57th Ordinary General Shareholders' Meeting held on June 26, 1992)


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5. Accounting Auditors

(1) Names of accounting auditors

Ernst & Young ShinNihon LLC

(2) Status of liability limitation agreement


(3) Remuneration paid to accounting auditors for the fiscal year 2012

Remuneration for the fiscal

year 2012 Total amount of pecuniary

and other property gains

that should be paid by the

Company and subsidiaries of

the Company

Ernst & Young ShinNihon LLC ¥43 million ¥43 million Notes 1: The audit agreement entered into between the Company and any accounting auditor does not

distinguish the amount of audit fees for audit under the Corporation Law from the one for the

audit under the Securities Exchange Law; therefore, the amount mentioned above at ‘section ①’

includes the amount of audit fees for the audit under the Securities Exchange Law. Notes2: AIDA AMERICA CORP., AIDA S.r.l., AIDA GREATER ASIA PTE.LTD., AIDA

ENGINEERING (M) SDN.BHD., AIDA HONG KONG LTD., AIDA ENGINEERING CHINA CO., LTD., and AIDA PRESS MACHINERY SYSTEMS CO., LTD., our major subsidiaries, take inspection of an audit corporation different from the accounting auditor of the Company.

(4) Contents of non-audit work


(5) Policy to determine the removal or decision not to reappoint Accounting Auditors

In the event the Company determines that any cause for legal removal may apply, the Board of Auditors may remove any accounting auditor with the unanimous agreement of auditors. Further, the Company can make dismissal or non-reappointment of the accounting auditor the agenda of the General Shareholders' Meeting, in accordance with the Board of Auditors' consent or the request of it.

(6) Disposition of suspension of business of accounting auditor during the past two years



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6. Corporate Systems and Policies

(1) System to ensure that performance of duties of directors will comply with laws and

regulations and the Articles of Incorporation, and other systems to ensure appropriate

business performance

With respect to the aforementioned systems, the matters the Company resolved as the “Basic Policy Concerning Improvement of the Internal Control System” at the Board of Directors’ meeting are as follows.

1) System to ensure that the performance of duties of Directors and employees will comply with laws and regulations and the Articles of Incorporation

The Company shall seek to ensure that the Aida Group Action Guidelines will be observed by establishing a system under which such guidelines are provided, the Officers in charge of compliance are appointed in order to promote such guidelines and the Compliance Committee is organized under the supervision of such Officers, and shall also set up the Audit Office to audit the status of performance of such guidelines and other related matters. In the event that an Officer or employee of the Company finds any act suspicious of a breach of the laws and regulations, etc., such act shall be reported to the Compliance Committee through a member of the Compliance Committee, and the Board of Directors shall develop measures to prevent a recurrence of such act according to the gravity thereof. In addition, the Internal Control Audit Office shall perform internal audits of the status of performance of such guidelines and report the results of such internal audits to the Representative Director and the Board of Auditors.

2) System concerning storage and management of information related to the execution of duties of Directors

The information related to the execution of duties of Directors shall be properly stored and managed in accordance with the laws and regulations and the internal regulations of the Company, and the Directors and Auditors may, at any time, inspect these documents in accordance with the internal regulations of the Company.

3) System concerning management of risk of losses, including establishment of regulations With respect to any risks related to safety, environment, disaster prevention, quality, compliance and export management, etc., the Company shall manage such risks by causing each division in charge of the relevant operations to establish relevant regulations and guidelines, audit the management of such risks and do other similar matters and, with respect to risks related to the promotion of the company-wide business of the Company, the Company shall make an effort to manage such risks by determining the material matters of such risks upon deliberating such material matters from various angles at meetings of the Board of Directors, management meetings, etc.

4) System to ensure the efficient execution of duties of Directors

The Company shall establish an annual policy as the company-wide objective, and each


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Director shall develop a division objective based on such annual policy at the division such Director is in charge of and shall report the status of the achievement thereof at meetings of the Board of Directors or management meetings. Directors shall make an effort to efficiently execute the material matters by obtaining consistent intentions at the relevant divisions through full deliberation of such material matters at meetings of the Board of Directors, management meetings, etc. in accordance with the rules for segregation of duties and decision making as provided for in each regulation.

5) System to ensure the appropriate business performance of the Consolidated Group consisting of the Company and its subsidiaries

The Company has appointed a Director in charge of each business segment of the Company or each company of the Consolidated Group and has given the responsibility and authority to create internal controls to such Director. On the other hand, such Director shall make periodical reports on the business performance and the status of management of internal controls at meetings of the Board of Directors or management meetings with respect to the area such Director is in charge of. In addition, Internal Control Audit Office audits the appropriateness and efficiency of the business process and the management control system of subsidiaries in cooperation with the subsidiary’s division that such Director is in charge of and the related business divisions.

6) Matters concerning employees who shall assist the duties of Auditors if such assistance is requested by Auditors

Upon the request of each Auditor, the Company shall post exclusive employees assisting the duties of Auditors in accordance with the direction of such Auditors.

7) Matters concerning independency of the aforementioned employees from Directors The consent of Auditors shall be required for any reshuffle of employees specified in 6) above.

8) System for Directors and employees to submit reports to Auditors and other systems concerning submission of reports to Auditors

Auditors shall attend management meetings, etc., as well as meetings of the Board of Directors, and receive material reports. In addition to the cases provided for by law, if a Director has knowledge of and/or finds any matters that have been resolved at a management meeting, any matters threatened to cause substantial damage to the Company, any material matters regarding a business conditions for each month, any material matters concerning internal audit conditions and risk management, any material breaches of laws and regulations or the Articles of Incorporation and any other material matters concerning compliance, the Director shall report such facts to the Board of Auditors. In addition, Directors and employees shall make any necessary reports upon the request


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of each Auditor as determined upon consultation between the Board of Directors and the Board of Auditors.

9) Other systems to ensure an effective audit performance of Auditors Auditors shall have periodical meetings with the Representative Director and shall be able to consult with, or request reports from, Directors and employees as necessary.

10) System to ensure reliability of financial reporting

The Company shall establish and operate group-wide internal control system which leads to promote developing the structure and effectiveness of the internal control over financial reporting to ensure the reliability of financial reporting, considering the response to Internal Control and Reporting System of Financial Instruments and Exchange Act as a part of reinforcing measures for corporate infrastructure. The Internal Control Audit Office shall be engaged in the periodic and continuous evaluation of the internal control effectiveness and provide corrective and remedial measures as necessary in order to secure soundness and appropriateness of the internal controls.

11) Basic policy aiming to sweep antisocial forces The Company shall reject any relationship with all those who disrupt orders or pose a threat to safety society for the people.

(2) Basic policy regarding what and how a person controlling decisions on the company’s

financial and business policies should be

1) Basic policy regarding what and how a person controlling decisions on the Company’s financial and business policies should be

The Board of Directors believes that since we, as a public corporation, allow the free purchase and sale of shares of the Company, if a specific person intends to conduct a large-scale purchase aiming at acquiring such number of shares of the Company as may have an influence on the decisions of the Company’s financial and business policies, the shareholders of the Company should make the final decision regarding whether or not to accept such large-scale purchase.

However, in managing the Company, it is indispensable to have specific management know-how based on highly-technical knowledge concerning the press machine business, which is the principal business of the Company, and an understanding of the relationships established with the stakeholders of the Company, such as domestic and foreign affiliated companies, business partners and customers of the Company, and without a sufficient understanding of the above matters by a person controlling decisions on our financial and business policies, the shareholder value that could be realized in the future by our shareholders may be damaged.

We have made and shall make every effort to cultivate investors’ understanding of the fair value of the Company’s shares through IR activities; provided, however, that it is indispensable that the shareholders of the Company be provided with appropriate and


- 20 -

sufficient information by both the large-scale purchaser and the Board of Directors in order to appropriately determine, within a short period of time, whether or not the purchase price of the Company’s shares proposed by the purchaser is reasonable, when a large-scale purchase is suddenly made. In addition, the potential impact of the large-scale purchase on the future management of the Company, as well as management policies and business plans, including a policy on the relationships with stakeholders of the Company, such as employees, affiliate companies, business partners and customers of the Company, which the large-scale purchaser wishes to adopt when the large-scale purchaser participates in the management of the Company, are material information for the shareholders of the Company in order to decide whether to continue to hold shares in the Company or not. We also believe that the opinion of the Board of Directors towards the large-scale purchase is material to the decision-making process of the shareholders of the Company.

Taking the above into account, we believe that, if a specific person intends to make a large-scale purchase aiming at acquiring the number of shares of the Company which may have an influence on the decisions on the Company’s financial and business policies, it is necessary for such large-scale purchaser to commence the large-scale purchase only after such a large-scale purchaser provides the Board of Directors with necessary and sufficient information regarding the large-scale purchase in advance and a certain assessment period for the Board of Directors elapses, in accordance with certain reasonable rules established and disclosed in advance by the Company for the benefit of the decision-making process of the shareholders of the Company.

In addition, among large-scale purchases, it cannot be said that there are never cases where the large-scale purchase in question has clearly abusive purposes and as a result will seriously undermine the interests of the Company’s shareholders as a whole, including the cases where irreparable damage is caused to the Company. In order to protect the interests of the Company’s shareholders as a whole, we believe that it is necessary to take such measures against such kind of large-scale purchase as the Board of Directors deems appropriate in accordance with certain reasonable rules established and disclosed in advance by the Company. (The aforementioned basic policy concerning what and how a person controlling decisions on the Company’s financial and business policies should be is hereinafter referred to as the “Basic Policy Concerning Company Control.”)

2) Effective utilization of our assets, formation of the appropriate Consolidated Group, and

other special efforts to realize the Basic Policy Concerning Company Control

In addition to the efforts set forth in 6 (2) 3) below, we will make every special effort to realize the Basic Policy Concerning Company Control, as follows.

The Company has adopted the corporate philosophy “to develop global activities as a forming system builder and to remain a company contributing to people and society.”

In order to realize this corporate philosophy, the Company focuses on the technical and product development that sensitively responds to the needs of customers using forming systems. In addition, the Consolidated Group intends to improve the corporate and shareholder values by appropriately allocating subsidiaries, etc. inside and outside Japan and developing corporate activities focusing on the increase of the consolidated earnings in order to effectively utilize the properties held by the Consolidated Group. Particularly,


- 21 -

the Consolidated Group is actively developing sales, production and services activities on a global basis by establishing the production bases in the main overseas markets in North America (U.S.A.), Europe (Italia) and Asia (Malaysia and China), as well as establishing four (4) production bases in Japan, and the Consolidated Group has established a system that can appropriately provide safe and high quality goods and services to customers within and outside Japan; in this way, the Consolidated Group places it as the pillar of our management strategies to become the “top runner” in the area of forming systems in the long and medium terms.

The Consolidated Group stated the following slogan in the New Medium-term Management Plan commencing in FY2012.

“We will achieve a balance between ‘Innovation as a forming systems builder’ and ‘Continued sustainable growth as a global company’ and will expand as a corporate group that is trusted by society.”

The Consolidated Group will implement the following matters as priority policies to realize this slogan:

1. Creating Customers

・Focus on growth markets

・Expand offering of innovative products

2. Increasing Value-Added Content

・Focus on strong products and high income operations

・Productivity improvements

In addition to these efforts, the Consolidated Group will make efforts to enhance the relationship of trust with our stakeholders, such as our shareholders, customers and business partners, and to improve the corporate value in the long and medium terms.

We believe that, since the aforementioned efforts will improve the market value of the Consolidated Group and, consequently, decrease the risk of appearance of large-scale purchasers who may considerably impair the interests of shareholders of the Company as a whole, the said efforts will go along with the Basic Policy Concerning Company Control. In addition, we believe it is clear that such efforts will not impair the common interest of the shareholders of the Company nor will they aim at maintaining the position of the Officers of the Company.

3) Efforts to prevent the Company’s property and business policies from being controlled by

inappropriate parties according to the Basic Policy Concerning Company Control

As the efforts to prevent the Company’s property and decisions on business policies from being controlled by an inappropriate party according to the Basic Policy Concerning Company Control, the Company, at a meeting of the Board of Directors held on May 13, 2010, resolved to adopt continuously (i) to establish rules (hereinafter referred to as the “Large-Scale Purchase Rules”) applicable to (a) any purchase of the Company’s shares and other securities by a Group of Specific Shareholders implemented with the intent to hold twenty percent (20%) or more of the Voting Rights Ratio of the Group of Specific Shareholders or (b) any purchase of the Company’s shares and other securities resulting


- 22 -

in the Group of Specific Shareholders holding twenty percent (20%) or more of the Voting Rights Ratio (with respect to any of such purchase, the purchase to which the Board of Directors has given prior consent is excluded, and any specific means of purchase, such as market transactions or tender offers, are acceptable. Such purchase is hereinafter referred to as a “Large-Scale Purchase” and a person that conducts a Large-Scale Purchase is hereinafter referred to as a “Large-Scale Purchaser.”) , and (ii) to establish certain policy depending on whether or not such Large-Scale Purchaser has observed the Large-Scale Purchase Rules (hereinafter referred to as the “Policy.”), on the condition precedent that the Company’s shareholders approve the Large-Scale Purchase Rules and the Policy at the Ordinary General Meeting of Shareholders held on June 29, 2010. Such approval was obtained at the Ordinary General Meeting of Shareholders held on June 29, 2010. For more details of the Policy, please refer to the press release made by the Company as of May 13, 2010 titled ”AIDA ENGINEERING, LTD. Announces Adoption of Basic Policy Concerning Company Control and Amendment to Policy toward a Large-Scale Purchase (Take-over Defense Measures)” (see the website of the Company: http://www.aida.co.jp).

4) The Policy complies with the Basic Policy Concerning Company Control, does not damage

the common interests of shareholders and does not pursue the maintenance of the status of corporate officers, and the reasons therefore

- The Policy complies with the Basic Policy Concerning Company Control

The Policy sets forth matters such as the substance of the Large-Scale Purchase Rules, the policy toward a Large-Scale Purchase, the establishment of the Special Committee, and the influence on shareholders and investors.

The Policy specifies that a Large-Scale Purchaser is required to provide the Board of Directors with all necessary and sufficient information concerning the Large-Scale Purchase in advance and that it may commence the Large-Scale Purchase only after a certain assessment period for the Board of Directors has elapsed and the Board of Directors may take countermeasures against any Large-Scale Purchaser who does not observe the aforementioned commencement rule.

The Policy also specifies that, even if the Large-Scale Purchaser observes the Large-Scale Purchase Rules, in the event that the Board of Directors judges that the Large-Scale Purchase by the Large-Scale Purchaser will materially damage the interests of the Company’s shareholders as a whole, the Board of Directors may take countermeasures against the Large-Scale Purchaser that are considered necessary in order to protect the interests of the Company’s shareholders as a whole.

As set forth above, it can be said that the Policy is consistent with the Basic Policy Concerning Company Control.

- The Policy does not damage the common interests of shareholders of the Company

As described in 6 (2) 1) above, the Basic Policy Concerning Company Control is based on the assumption that the common interests of shareholders of the Company should be respected. The Policy has been prepared consistent with the Basic Policy Concerning Company Control and is intended to ensure that shareholders of the Company are


- 23 -

provided with the information necessary to decide whether or not to accept a Large-Scale Purchase, the opinion of the Board of Directors and the opportunity to receive alternative plans. The Policy does not damage the common interests of the shareholders of the Company, but rather contributes to their interests. In addition, the Company believes that the facts that the effectuation and extension of the Policy and termination of the Policy before its expiration date depend on the approval of the Company’s shareholders and that the shareholders can terminate the Policy if they desire ensure that the Policy does not damage the common interests of the Company’s shareholders. The Policy satisfies the three (3) principles provided for in the “Guidelines Regarding Takeover Defense for the Purpose of Protection and Enhancement of Corporate Value and Shareholder’s Common Interests,” which was issued by the Ministry of Economy, Trade and Industry and the Ministry of Justice on May 27, 2005.

- The Policy does not pursue the maintenance of the status of Officers

While the Policy has a broad principle that leaves the final decision on whether or not a Large-Scale Purchase shall be accepted to the judgment of the shareholders, the Policy requires compliance with the Large-Scale Purchase Rules and takes countermeasures to the extent necessary to protect the interests of the Company’s shareholders as a whole. The Policy discloses in advance and in detail the cases where the Board of Directors will take countermeasures, and the Board of Directors shall take countermeasures in accordance with the provisions of the Policy.

In addition, the Policy specifies that, in the event that the Board of Directors makes a material decision related to the Policy, such as if it takes countermeasures in connection with a Large-Scale Purchase, it shall request advice from independent outside experts, etc. as necessary, consult with the Special Committee consisting of members who are independent of the management team operating the businesses of the Company, and give utmost respect to the recommendation of such Special Committee. As mentioned above, the Policy includes procedures through which the appropriate operations by the Board of Directors are ensured.

In addition, the term of office of the Directors of the Company is one (1) year, and staggered terms are not adopted. Therefore, the Policy is not a slow-hand takeover defense measure (a takeover defensive measure that requires more time to prevent its invocation because it does not allow the replacement of all Board members at once). As described above, the Company believes that it is clear that the Policy does not pursue the maintenance of the status of the Company’s Officers.

(3) Policy concerning determination of the dividends of retained earnings, etc.

There is no such policy because the Company has not provided, in its Articles of Incorporation, that the Company shall determine the dividends of retained earnings, etc. by a resolution of the Board of Directors, although the Company may so provide pursuant to the provisions of Article 459, Paragraph 1 of the Corporation Law.

Note: In this Business Report, unless otherwise specified, each monetary amount is indicated with a fraction rounded down to the respective unit, and each ratio is indicated with the fraction rounded to the nearest unit.


- 24 -

Consolidated Balance Sheet (As of March 31, 2012)

(Millions of yen)

Assets Amount

Current assets: 46,613

Cash and deposits 13,222 Notes and accounts receivable-trade 11,618 Securities 4,000 Finished products 1,758 Inventories 8,096 Raw materials and supplies Deferred income taxes

2,581 1,215

Other current assets 4,211 Allowance for doubtful accounts △89

Fixed assets: 24,686

Property, plant and equipment: 15,879

Buildings and structures 6,152 Machinery, equipment and vehicles 3,584 Land 4,697 Lease assets 949 Construction in progress 200 Other equipment 294

Intangible fixed assets: 623

Leasehold 461 Software 160 Others 1

Investments and other assets: 8,183

Investments in securities 3,574 Insurance reserve fund 3,192 Deferred income tax 36 Other assets 1,456 Allowance for doubtful accounts △76

Total assets 71,300


- 25 -

Liabilities Amount

Current liabilities: 19,687

Accounts payable-trade 4,724 Short-term Lease obligations 916 Non-trade payables 3,768 Income taxes payable 308 Advances from customers on contracts 6,110

Accrued warranty costs 776 Accrued bonuses for employees 692 Provision for directors’ bonuses 25 Provision for loss on orders received 484 Other current liabilities 1,878

Long-term liabilities: 4,140

Long-term loans payable Long-term Lease obligations Long-term accounts payable Deferred income taxes

1,500 43

320 1,709

Accrued pension and severance costs for employees 306 Other long-term liabilities 260

Total liabilities 23,828

Net Assets

Shareholders’ equity: 48,360

Common stock 7,831 Additional paid-in capital 12,978 Retained earnings 36,666 Treasury stock △9,114

Accumulated Other Comprehensive Income (loss): △△△△955

Net unrealized gains on other securities 1,570 Deferred hedge gains or losses 19 Foreign currency translation adjustments △2,546

Subscription rights to shares:

66

Total net assets 47,472

Total liabilities and net assets 71,300


- 26 -

Consolidated Statement of Income (April 1, 2011 through March 31, 2012)

(Millions of yen) Account Item Amount

Net sales 52,240

Cost of sales 42,593

Gross profit 9,647

Selling, general and administrative expenses 7,425

Operating income 2,221

Non-operating income

Interest income 27 Dividend income 68 Redemption profit on maturity of endowment insurance 888

Subsidies income 75

Other non-operating income 71 1,131

Non-operating expenses

Interest expenses 56 Foreign exchange loss 63

Commission fee 87

Provision for doubtful accounts 50

Other non-operating expenses 73 331

Ordinary profit 3,021

Extraordinary gain

Gain on sale of fixed assets 49 49

Extraordinary loss

Loss on sale of fixed assets 8 Loss on disposal of fixed assets 53 Impairment loss 78 Others 6 148

Income before income taxes 2,922

Income taxes-current 343 Income taxes-deferred △263 79

Income before Minority Interests 2,842

Net income 2,842


- 27 -

Consolidated Statement of Changes in Net Assets (April 1, 2011 through March 31, 2012)

(Millions of yen)

Shareholders' equity

Capital stock

Beginning balance 7,831

Ending balance 7,831

Capital surplus


Changes of items during the period

Purchase of treasury stock △ 12

Total changes of items during the period △ 12


Retained earnings


Increase (decrease) due to the change of subsidiaries’ closing date △16


Dividends from surplus △ 383

Net income 2,842

Total changes of items during the period 2.459


Treasury stock

Beginning balance △ 9,152



Disposal of treasury stock 38

Total changes of items during the period 37

Ending balance △ 9,114

Sub-total: Shareholders' equity


Increase (decrease) due to the change of subsidiaries’ closing date △16



Net income 2,842



Total changes of items during the period 2,484


Accumulated other comprehensive income:

Valuation difference on available-for-sale securities



Net changes of items other than shareholders' equity △ 3




- 28 -

Gain(loss) on deferred hedge

Beginning balance △ 42


Net changes of items other than shareholders' equity 62


Ending balance 19

Foreign currency translation adjustment






Accumulated other comprehensive income:





Ending balance △ 955

Subscription rights to shares

Beginning balance 71


Issuance of subscription rights to shares 19

Exercise of subscription rights to shares △23

Forfeit of subscription rights to shares △ 1


Ending balance 66

Total net assets


Decrease in retained earnings with newly consolidated subsidiaries △16



Net income 2,842




Exercise of subscription rights to shares △23






- 29 -

Table of Notes to Consolidated Financial Statements

Significant Items for the Preparation of Consolidated Financial Statements

1. Scope of consolidation (1) Number and name of consolidated subsidiaries

Number of consolidated subsidiaries: 19 Name of consolidated subsidiaries

ACCESS LTD., AIDA BUSINESS CORP., AIDA GREATER ASIA PTE LTD., AIDA MALAYSIA SDN. BHD., AIDA (THAILAND) CO., LTD., PT AIDA INDONESIA, AIDA INDIA PVT. LTD., AIDA VIETNUM CO., LTD., AIDA ENGINEERING (M) SDN. BHD., AIDA HONG KONG LTD., AIDA ENGINEERING CHINA CO., LTD., AIDA PRESS MACHINERY SYSTEMS CO., LTD., AIDA AMERICA CORP., AIDA CANADA, INC., AIDA do BRAZIL, AIDA S.r.l., AIDA ENGINEERING DE MEXICO, S. DE R.L. DE C.V., AIDA PRESSEN GmbH, AIDA Maroc Sarl

Three consolidated subsidiaries (AIDA PRESS MACHINERY SYSTEMS CO., LTD., AIDA VIETNUM CO., LTD., and AIDA Maroc Sarl) have been increased due to materiality of subsidiaries and establishment.

(2) Name of non-consolidated subsidiaries Name of non-consolidated subsidiaries: OOO AIDA, A N TOOLING TECHNOLOGY CO., LTD.

Reasons for excluding from consolidation: The sum of total assets, net sales, net income (corresponding amount of contribution), and retained earnings (corresponding amount of contribution) of the non-consolidated subsidiaries respectively are all minor and would not have a material effect on consolidated financial statements. The non-consolidated subsidiaries, therefore, were excluded from the scope of consolidation.

2. Application of the equity method Non-consolidated subsidiaries and affiliates to which the equity method was not applied Name of non-consolidated subsidiaries: OOO AIDA, A N TOOLING TECHNOLOGY CO., LTD. Reason for not applying the equity method

The sum of total assets, net sales, net income (corresponding amount of contribution), and retained earnings (corresponding amount of contribution) respectively of the non-consolidated subsidiary are all minor and would not have a material effect on consolidated financial statements. The non-consolidated subsidiary, therefore, was excluded from the scope of application for the equity method.

3. Fiscal years of consolidated subsidiaries

AIDA ENGINEERING CHINA CO., LTD. and AIDA PRESS MACHINERY SYSTEMS CO., LTD., both of which have fiscal year end of December 31, were consolidated adopting provisional settlement of account. AIDA ENGINEERING, LTD. and other consolidated subsidiaries unify the closing date.

4. Accounting standards

(1) Evaluation standards and methods for significant assets 1. Securities Other securities


- 30 -

Securities with market values Market value method based on market or other prices as of the consolidated closing date (Valuation differences are all accounted for as direct entries to net assets. Cost at the time of sale is determined using the moving average method.)

Securities without market values Moving average cost method 2. Derivative instruments Market value method 3. Inventories

Finished goods and work in process: Mainly, Specific cost method (Cut down the book value because of decreased profitability)

Raw materials: Mainly, First-in-first-out cost method (Cut down the book value because of decreased profitability)

(2) Depreciation method of significant depreciable assets

1. Property, plant and equipment Mainly, straight-line method The Company’s buildings and structures, and machinery and equipment, are depreciated using useful lives determined by the Company.

Buildings and structures 2-50 years

Machinery, equipment, and vehicles 2-9 years

2. Intangible fixed assets Straight-line method. Software for internal use is amortized based on the

internally estimated useful life (five (5) years for and its domestic consolidated subsidiaries).

3. Leasehold Straight-line method. (Leasehold related non-ownership Lease period is using as depreciation years and no transfer) residual value is estimated. (In the case of lease contract agreement on residual

value, it is guaranteed residual value.)

(3) Accounting criteria for significant reserves 1. Allowance for doubtful accounts To provide for losses due to bad debts, allowances for

normal receivables are provided using a rate determined by past bad debt experience, and allowances for specific doubtful accounts are provided for the estimated uncollectible portions of those accounts after an examination of individual accounts.

2. Accrued warranty costs To provide for expenses that emerge after products have been transferred to customers, anticipated expenses for maintenance mainly during warranty periods are recorded as reserve for warranty claims.

3. Accrued bonuses for employees To provide for payment of bonuses to employees, the amount borne for the consolidated fiscal year is recorded as accrued bonuses.

4. Provision for directors’ bonuses To provide for payment of bonuses for directors, the amount borne for the consolidated fiscal year is


- 31 -

recorded as accrued bonuses. 5. Provision for loss on orders received To provide for future losses related to order

contracts, at the end of the fiscal year ended March 31, 2012 AIDA ENGINEERING estimates future losses, and makes a rational estimate of the amount of loss that may be incurred. The estimated amount of future losses is recorded as a reserve.

6. Accrued pension and severance costs for employees To provide for the payment of retirement benefits, reserve for retirement allowance for employees are recorded based on projected retirement benefit obligations and pension assets at the end of the consolidated fiscal year. Actuarial differences are amortized from the following fiscal year of the recognition, on a straight-line basis over a set number of years (10 years. 5 years for some of domestic consolidated subsidiaries.) within the average remaining service years of employees. Prior service costs are collectively amortized at the time they are incurred. Defined benefit pension fund at the end of year, represents prepaid pension expense which is recorded as ‘Others in investment and other assets’

(4) Other important matters based on which consolidated financial statements are prepared 1. Standards for converting the assets and liabilities denominated in foreign currencies into yen

Foreign currency receivables and payables are converted to yen as of the consolidated closing date and using the spot exchange rate. Exchange differences are recorded as gain or loss. All assets and liabilities of overseas consolidated subsidiaries are converted to yen as of the consolidated closing date and using the spot exchange rate. Income and expenses are converted to yen using the average exchange rate for the fiscal year. Exchange differences are included in foreign currency translation adjustments under net assets.

2. Hedge accounting method Hedge accounting The Company uses deferral hedge

accounting methods. Means for hedging and object of hedge (Means for hedging) Foreign exchange contract and

currency option (Object of hedge) Prospective foreign currency

transaction Hedge policy The exchange fluctuation risk relating

to the object of hedge is hedged within certain limits in accordance with internal rules which contain the authority regulations and the maximum transaction amount relating to derivative transactions.

Method of valuing the effectiveness of hedging The Company skips the valuation of effectiveness of hedging because the object of hedge has a direct relationship with the means of hedging.


- 32 -

3. Consumption taxes The Company and its consolidated domestic subsidiaries record transactions exclusive of consumption tax.

5. Additional information We have applied “The Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement No.24, December 4, 2009)” and “The Guidance on Accounting Standard for Accounting Changes and Error Corrections (ASBJ Guidance No.24, December 4, 2009)” for accounting changes and error corrections occurred from the beginning of this fiscal year.

Notes to the consolidated balance sheet

1. Accumulated depreciation for property, plant and equipment ¥20,077 million

2. Accumulated advanced depreciation of fixed assets using governmental subsidies, etc., which is directly deducted from acquisition prices

Buildings and structures ¥173 million

Notes to the consolidated statement of changes in net assets

1. Class and number of outstanding shares at the end of the current consolidated fiscal year Common stock: 79,147,321

2. Matters relating to dividends from retained earnings Dividends paid

Resolution Class of shares

Dividend distribution

source

Total amount of dividends

Per share dividends

Record date for list of shareholders to receive dividends:

Effective date

June 29, 2011 Ordinary general shareholders' meeting

Common stock

Retained earnings

383 million

yen 6 yen March 31, 2011

June 30, 2011

Dividends the record date for which belongs to the current consolidated fiscal year and the effective date of which belongs to the following consolidated fiscal year The resolution is expected to be made as follows

Resolution Class of shares

Dividend distribution

source

Total amount of dividends

Per share dividends

Record date for list of shareholders to receive dividends:

Effective date

June 28, 2012 Ordinary general shareholders' meeting

Common stock

Retained earnings

896 million

yen 14 yen March 31, 2012

June 29, 2012

3. Matters relating to stock acquisition rights (those for which the exercise period has started) issued by the Company and outstanding as of the end of the current consolidated fiscal year

Date of resolution for

issuance (the Board of Directors)

Number of stock

acquisition rights

Class and number of shares subject to stock

acquisition rights


- 33 -

The 1st series stock acquisition right

March 24, 2003 41 Common stock

41,000

The 2nd series stock acquisition right

January 29, 2004 149 Common stock

149,000

The 3rd series stock acquisition right

February 10, 2005 528 Common stock

528,000

The 4th series stock acquisition right


918,000



15,000



25,000



59,000



55,000



49,000

Notes to Financial Instruments

(Additional Information) Current consolidated fiscal year is based upon the “Accounting Standard for Financial Instruments (ASBJ Statement No.10) (March 10, 2008) and Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No.19) (March 10, 2008)”.

1. Status of Financial Instruments

(1) Policy for Financial Instruments Fund management is restricted to short-term deposits, however, financing activities of our group are based on bank loans. Derivatives are not used for speculative transactions, however, are used in order to prevent following risks. (2) Detail and Risks of Financial Instruments Operating Receivables (Notes & Accounts Receivables) are exposed to the customer credibility. In order to reduce foreign exchange risks caused by global business activities on foreign currency based operating receivables, our group is using exchange contracts to hedge the risk. Though Negotiable Deposits as short-term investments are not listed under coverage of the payoff system (deposit insurance cap), deposit terms are all less than 1 year.

Operating Payables (Accounts Payable) are to be settled within 6 months, which partly includes foreign exchange risk based on import of material from overseas, however, it is in the range of other foreign currency based operating receivables.

The main purpose of lease obligation concerning long-term debts and finance lease is fund arrangements for investment in facilities and research and development factors. The repayment periods for the debts are within 5 years at most.

Investment securities mainly contain stocks, which is an object of amount fluctuation risk. Derivatives contains future contracts and currency options objecting the hedge transactions

regarding foreign exchange fluctuations caused by foreign currency based operating receivables and payables.

(3) Organization of Risk Management for Financial Instruments


- 34 -

① Credibility Risk (Risk on contractual default) Management In order to control operating receivables, our sales and service departments (including

consolidated subsidiaries) are conducting monitoring operations by inspecting account wise balance and payment schedule periodically which also leads us to cope with the financial risks in initial basis.

To prevent the counterparty risks, derivative transactions are only conducted with banks with high credibility standards.

Maximum amount of credibility risk as at the end of current consolidated fiscal year is stated in credit exposure of financial instruments amount of balance sheet.

② Market Risk Management Our group is using exchange contracts in order to prevent the foreign exchange fluctuation risk on foreign currency based operating receivables and payables. Derivative transactions are based on our internal authorization and budgetary regulations, which sustain hedge transactions foreign exchange fluctuation risk in a constant range. Management of investment securities is conducted by inspecting market value and financial conditions of issuer, periodically.

(4) Supplementary Detail Regarding Market Value of Financial Instruments

Fair value of the items includes the amount based on market value. In addition, it also includes the amount computed legitimately for the items which do not have any market value. Based on adoption of different preconditions, amount computed legitimately may fluctuate in accordance with summarizing of fluctuating factors to compute the aforementioned amount. Amount

regarding derivative transactions of “②Contract Amount” stated in “2. Information Regarding Fair

Value of Financial Instruments” basically do not show the market risk related to derivative transactions.

2. Information Regarding Fair Value of Financial Instruments

Excluding items of which the fair value is difficult to be obtained, following is the balance of fair value as at March 31, 2012.

（Amount Unit：Millions of yen）

Consolidated B/S

Amount Fair Value Difference

(1) Cash & Deposits 13,222 13,222 -

(2) Notes & Accounts Receivable 11,618 11,618 -

(3) Short-term Investments 4,000 4,000 -

(4) Investment Securities

Other Securities 3,501 3,501 -

Total Assets 32,342 32,342 -

(1) Accounts Payable(Trade) 4,724 4,724 -

(2) Accounts Payable (Others) 3,768 3,768 -

(3) Long-term Debts 1,500 1,505 5

(4) Lease obligations (including due within one year)

960 971 11

Total Liabilities 10,953 10,970 17

Derivative transactions which are not an

object of hedge accounting（*） 46 46 -

Derivative transactions which are an object

of hedge accounting（*） 34 34 -

Notes: (*) states the net amount of credit and debt incurred by derivative transactions.


- 35 -

Notes (1): Computing method of fair value of financial instruments and information regarding

securities and derivative transactions Assets

(1) Cash & Deposits

In accordance with all short term bank deposits, book value is counted as a fair value, based on similarity of both fair and book values.

(2) Notes & Accounts Receivables

As based on short term settlements, fair and book value of these items are almost the same, therefore, the amount is based on our book value.

(3) Short-term Investments

As negotiable deposits are all short-term, fair and book values of these items are almost the same, therefore, the amount is based on our book value.

(4) Investment Securities

The fair value of stocks is based on the stock exchange rates. Following diagram states the specific information for other securities.

（Amount Unit：Millions of yen）

Category Acquisition Cost Consolidated B/S Amount Difference

Stock 956 3,384 2,427 Items with higher fair value than consolidated B/S amount Subtotal 956 3,384 2,427

Stock 135 116 △18 Items with lower fair value than consolidated B/S amount Subtotal 135 116 △18

Total 1,092 3,501 2,409

Liabilities (1) Accounts Payable (Trade)

As based on short term settlements, fair and book value of these items are almost same, therefore, the amount is based on our book value.

(2) Accounts Payable (Others) As based on short term settlements, fair and book value of these items are almost same, therefore, the amount is based on our book value.

(3) Long-term Debts Fair value is computed by discounting the amount by using interest rate, based on the assumption of new debt borrowing of same total principal amount.

(4) Lease Obligations Their fair value is calculated using assumed discount ratio which would be implemented by newly lease contract amounting for basic amount and interest rate.

Derivative Transactions

① Items Not Counted as Hedge Accounting Following are the details of category, contract amount, principal amount based on contracts, fair value, valuation loss and computing method of fair value as at the end of current consolidated fiscal year.

Currency Information


- 36 -

（Amount Unit：Millions of yen） Contract Amount

Classification Category of Derivative Transactions

Over One Year

Fair Value Valuation

Loss/Profit

Exchange Contract Transactions

Selling Price

EU € 523 - 27 27

US $ 148 - 5 5

Buying Price

JP Yen 126 - △2 △2

EU € 243 - 3 3

Currency Option Transactions

Selling Price

Call

EU € 43 - - -

(Option Fee) (△1) (-) (△0) (1)

US $ 965 - - -

(Option Fee) (△19) (-) (△12) (7)

Buying Price

Put

EU € 43 - - -

(Option Fee) (1) (-) (2) (1)

US $ 965 - - -

(Option Fee) (19) (-) (22) (2)

Transactions (Excluding

Market Transactions)

Total 1,040

(-) -

(-) 34

(12) 34

(12)

Notes (*) Computing Method of Fair Value Exchange Contract Transactions: Computed on the base of price presented by financial institutions. Currency Option Transactions: Assessment of fair value of option fee is stated on the base of option fee

presented by financial institutions.


- 37 -

② Items Counted as Hedge Accounting Following are the hedge accounting method wise details of contract amount, principal amount based on contracts as at the end of current consolidated fiscal year.

Currency Information （Amount Unit：Millions of yen）

Contract Amount Method of Hedge

Accounting Category of Derivative Transactions Main Scope of Hedge

More Than One Year

Fair Value

Exchange Contract Transactions

Selling Price

EU € 15 - 0

US $ 1,043 19 27

JP Yen 19 - △0

Buying Price

JP Yen 43 - 3

US $ 87 - 2

Currency Option

Selling Price

Call

US $ 1,932 - -

(Option Fee) (△29) (-) (△32)

EU € 859 - -

(Option Fee) (△31) (-) (29)

Put

US $ 140 - -

(Option Fee) (△1) (-) (1)

Buying Price

Put

US $ 1,932 - -

(Option Fee) (29) (-) (△16)

EU € 859 - -

(Option Fee) (31) (-) (19)

Call

US $ 140 - -

(Option Fee)

Forecasted Transactions of

Foreign Currency

(1) (-) (0)

Based on Principle Method

Total 1,207

(-) 19 (-)

32 (2)

Notes (*) Computing Method of Fair Value Exchange Contract Transactions: Computed on the base of price presented by financial institutions. Currency Option Transactions: Assessment of fair value of option fee is stated on the base of option fee

presented by financial institutions. Notes (2): Financial instruments of which the fair value is difficult to be obtained （Amount Unit：Millions of yen）

Category Consolidated B/S Amount

Other Securities

Unlisted Stocks 60

Stocks of non-consolidated subsidiaries 13


- 38 -

Items given above do not have any market value, moreover, the fair value of the aforementioned items is difficult to be obtained. Therefore, the items given above are excluded in Assets (4) Investment Securities.

Notes to Investments and Rental Properties

None to be mentioned. Notes to Per Share Information Shareholders’ equity per share ¥781.51 Net Profit per share ¥ 46.90

Note:

The number of treasury stocks as common stocks using for calculation of net assets per share and net assets per income, is excluded from ‘the number of common stocks for calculation of net assets per share’ and ‘the average number of common stocks ’, since our shares at 3,397,000 obtained by Trust Account E is treated as treasury stock as of March 31, 2012.

Notes to Material subsequent events



- 39 -

Non consolidated Balance Sheet (As of March 31, 2012)

(Millions of yen)

Assets Amount

Current assets: 28,951

Cash and deposits 3,711 Notes receivable-trade 1,532 Accounts receivable-trade 10,936 Securities 4,000 Finished products 376 Inventories 4,546 Raw materials and supplies 436 advance payments 314 Prepaid expenses 181 Deferred tax assets 1,084 Accounts receivable-non trade 1,072 Advances received 658 Other current assets 99 Allowance for doubtful accounts △0

Fixed assets: 25,707

Property, plant and equipment: 11,382

Buildings 3,960 Structures 56 Machinery and equipment 1,774 Industrial vehicles 32 Tools, furniture and fixtures 146 Land 4,447 Lease receivables 939 Construction in progress 25

Intangible fixed assets: 146

Software 145 Others 1

Investments and other assets: 14,178

Investment securities 3,552 Investment securities for affiliates 6,217 Long-term loans 50 Long-term loans to employees 9 Accounts receivable from debtors under bankruptcy proceeding 1 Long-term prepaid expenses 16 Insurance reserve fund 3,182 Guaranteed deposits 815 Other assets 410 Allowance for doubtful accounts △76

Total assets 54,658


- 40 -

Liabilities Amount

Current liabilities: 11,249

Accounts payable-trade 3,597 Lease obligations 913 Non-trade payable 3,745 Accrued expenses 289 Income tax payable 50 Advances received 1,076 Deposits received 76 Accrued warranty costs 428 Accrued bonuses for employees 512 Accrued bonuses for directors 25 Provision for loss on order received 351 Other current liabilities 182

Long-term liabilities: 3,391

Long-term loans payable Lease obligations Long-term accounts payable-other Deferred income tax Other fixed liabilities

1,500 37

311 1,520

23

Total liabilities 14,641

Net Assets

Shareholders’ equity 38,368

Common stock: 7,831

Additional paid-in capital: 12,988

Capital reserve 12,425 Other additional paid-in capital 563

Retained earnings: 26,663

Legal reserve 1,957 Other retained earnings balance 24,706

Reserve for dividends 1,370 Reserve for research and development 5,400 Reserve for foreign exchange fluctuations 2,000 Reserve for cancellation of stock 6,000 Reserve for advanced depreciation of replaced property 1,031 General reserve 6,710 Net retained earnings forwarded 2,193

Treasury stock △△△△ 9,114

Revaluation and translation adjustments:

1,582

Valuation difference on available-for-sale securities 1,565

Deferred hedge gains or losses 17

Subscription rights to shares 66

Total net assets 40,017

Total liabilities and net assets 54,658


- 41 -

Non consolidated Statement of Income (April 1, 2011, through March 31, 2012)

(Millions of yen) Account Item Amount

Net sales 33,777

Cost of sales 28,253

Gross profit 5,523

Selling, general and administrative expenses 4,411

Operating income 1,112

Non-operating income

Interest income 1 Dividends income 68 Real estate and other lease revenue 113 Gain on maturity redemption of endowment insurance 888

Subsidies income 75

Other non-operating income 42 1,189

Non-operating expenses

Interest expenses Expenses related to leased assets Foreign exchange loss

41 119 43

Commission fee 87

Provision for doubtful accounts Other non-operating expenses

50 56

398

Ordinary profit 1,904

Extraordinary gain

Gain on sales of non-current assets 19 19

Extraordinary loss

Loss on retirement of non-current assets 53 Impairment loss Other extraordinary loss

31 6

91

Income before income taxes 1,832

Income taxes-current 13 Income taxes-deferred △254 △△△△240

Net income 2,073


- 42 -

Non Consolidated Statement of Changes in Net Assets (April 1, 2011 through March 31, 2012)

(Millions of yen)

Shareholders' equity:

Capital stock



Additional paid-in capital

Capital reserve



Other additional paid-in capital



Sale of treasury stock △12

Total changes of items during the period △12

Ending balance 563

Sub-total: Additional paid-in capital



Sale of treasury stock △12

Total changes of items during the period △12


Retained earnings

Legal reserve



Other retained earnings balance

Reserve for dividends



Reserve for research and development



Reserve for foreign exchange fluctuations



Reserve for cancellation of stock



Reserve for advanced depreciation of replaced property



Increase in reserve for advanced depreciation of replaced property 79


- 43 -

associated with alteration of tax rates

Reversal of reserve for advanced depreciation of replaced property △ 11



General reserve



Net retained earnings forwarded



Increase in reserve for advanced depreciation of replaced property associated with alteration of tax rates △ 79

Reversal of reserve for advanced depreciation of replaced property 11


Net income 2,073



Sub total: Retained earnings




Net income 2,073



Treasury stock




Sale of treasury stock 38



Sub-total: Shareholders' equity




Net income 2,073





Valuation and translation adjustments:

Valuation difference on available-for-sale securities




- 44 -




Gain(loss) on deferred hedge





Ending balance 17

Sub-total: Valuation and translation adjustments






Subscription rights to shares




Exercise of subscription rights to shares △ 23



Ending balance 66

Total net assets




Net income 2,073




Exercise of subscription rights to shares △ 23






- 45 -

Table of Individual Notes

Items regarding significant accounting policies

1. Valuation standards and methods for assets (1) Securities

Investments in affiliates……………… …Moving average cost method

Available-for-sale securities

Securities with market values…………Market value method based on market or other prices

as of the closing date (Valuation differences are directly charged or credited to net assets, and the cost of securities sold is computed by the moving average method.)

Securities without market values ……Moving average cost method

(2) Derivative instruments… ……………Market value method

(3) Inventories Finished goods and work in process --- Specific cost method (Cut down the book value because of decreased profitability) Primary materials --- First-in first-out cost method (Cut down the book value because of decreased profitability)

2. Depreciation methods for fixed assets

(1) Property, plant and equipment… …Straight-line method (excluding leased assets)

(2) Intangible fixed assets Straight-line method (excluding leased assets)

Software for internal use is amortized using the straight-line method and years of useful life within the Company (5 years)

(3)Leased assets Straight-line method using a period of depreciation to the

lease period with a remaining value of zero. (In the case of lease contract agreement on residual value,

it is guaranteed residual value.) 3. Allocation method of reserves

(1) Allowance for doubtful accounts To provide for losses due to bad debts, allowances for normal receivables are provided using a rate determined by past bad debt experience, and allowances for specific doubtful accounts are provided for the estimated uncollectible portions of those accounts after an examination of individual accounts.

(2) Provision for product warranties To provide for expenses that emerge after products have been transferred to customers, anticipated expenses for maintenance during warranty periods are recorded as reserve for warranty claims.

(3) Provision for bonuses To provide for payment of bonuses to employees, the amount expected to be borne for the current fiscal year is recorded as accrued bonuses.

(4) Provision for directors’ bonus To provide for the payment of bonuses for directors, the amount expected to be borne for the current fiscal year is


- 46 -

recorded as accrued bonuses for directors. (5) Provision for loss on order received To provide for future losses related to order contracts, at

the end of the fiscal year ended March 31, 2009 AIDA ENGINEERING estimates future losses, and makes a rational estimate of the amount of loss that may be incurred. The estimated amount of future losses is recorded as a reserve.

(6) Accrued pension and severance costs for employees To provide for the payment of retirement benefits, reserve

for retirement allowance for employees are recorded based on projected retirement benefit obligations and pension assets at the end of the current fiscal year. Actuarial differences are amortized from the following fiscal year of the recognition, on a straight-line basis over a set number of years (10 years) within the average remaining service years of employees. Prior service costs are collectively amortized at the time they are incurred. Defined benefit pension fund at the end of year, represents prepaid pension expense which is recorded as ‘Others in investment and other assets’

4. Other important matters based on which financial documents are prepared

(1) Hedge accounting methods 1) Hedge accounting methods The Company uses deferral hedge

accounting methods. 2) Means for hedging and object of hedge

(Means for hedging) Exchange reservation and currency option

(Object of hedge) Foreign currency prospective business 3) Hedging policy According to the internal rules

specifying the authority regulations and transactions limitation regarding derivative trading, the currency exchange risk is hedged within a certain range.

4) Method of valuing the effectiveness of hedging Because the relation between those hedged and the hedge method is direct, evaluation of hedge effectiveness is omitted.

(2) Accounting for consumption taxes

The Company record transactions exclusive of consumption tax. Descriptions on financial statements -Balance sheet

‘Advances received’ is described as a segment from the fiscal year ended March 31, 2012, as increasing its significance on amount. “Advances received” of ¥483 million in the previous fiscal year was included in “Other assets” in current assets.


- 47 -

5. Additional information We have applied “The Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement No.24, December 4, 2009)” and “The Guidance on Accounting Standard for Accounting Changes and Error Corrections (ASBJ Guidance No.24, December 4, 2009)” for accounting changes and error corrections occurred from the beginning of this fiscal year.

Note on balance sheet

1. Liabilities on guarantees Liabilities on guarantees for bank borrowings by subsidiaries AIDA S.r.l. ¥2,315million (EUR 21,101 thousands)

2. Accumulated depreciation of property, plant and equipment

¥16,871 million 3. Accumulated advanced depreciation of fixed assets using governmental subsidies, etc., which is

directly deducted from acquisition prices Buildings ¥173 million

4. Monetary claims receivable from and payable to affiliate companies Short-tem monetary receivables ¥8,108million Short-tem monetary payables ¥1,733 million

Note on the profit and loss statement

1. Volume of transaction with affiliated companies Volume of operating transaction

Net sales ¥ 14,462 million Purchases ¥ 5,964 million Sales commissions ¥ 60 million Other Selling, general and administrative expenses ¥ 71 million Volume by transaction other than operating transaction ¥110 million

Note on change statement such as equity capital

1. Class and number of treasury stocks at the end of the current fiscal year Common stock 18,488,681

Note:

The Company resolved, at the Board of Directors meeting held on October 29, 2010, that a “J-ESOP (Employee Stock Ownership Plan),” a welfare benefit service to grant the Company’s shares as an employee benefit trust, be implemented for the purpose of increasing motivation and raising the morale of employees with the goals of higher stock prices and improvement of business performance by allowing them to share in the economic effects along with shareholders through enhanced linkage with the stock price of the Company’s shares and operating results. As a result of implementing this new welfare scheme, Trust & Custody Services Bank, Ltd. (trust account E) (hereinafter the “Trust Account E”), obtained 3,400,000 shares as of December 1, 2010. The number of shares as treasury stock includes our shares held by the Trust Account E at 3,397,000 as of March 31, 2012 is included on calculation of consolidated statement of changes in net assets and net assets per share and net income per share.


- 48 -

Note on tax effect accounting system

1. Breakdown of deferred tax assets by major causes Inventory appraisal loss ¥348 million Accrued warranty costs ¥162 million Accrued bonuses ¥194 million Depreciation expense ¥952 million Loss on revaluation of investment securities ¥39 million Unrealized loss on golf club membership ¥ 8 million Long-term accounts payable ¥89 million Loss on revaluation of the shares of affiliated companies ¥3,732 million Loss carried forward ¥1,888 million Others ¥420 million

Deferred tax assets subtotal ¥7,836 million

Allowance account △¥6,731 million

Deferred tax assets total ¥1,105 million 2. Breakdown of deferred tax liabilities by major causes

Derivatives transaction △¥11 million

Accrued pension and severance costs for employees △¥120 million

Reserve for advanced depreciation of replaced property △¥571 million

Valuation difference on available-for-sale securities △¥837 million

Deferred tax liabilities total △¥1,541 million

Note on the fixed asset used on lease In addition to the fixed assets appropriated on the balance sheet, a part of the office equipment and manufacturing facilities are used on non-transfer-ownership finance lease. The acquisition cost equivalent and the term-end outstanding balance equivalent of unearned lease fees are calculated inclusive of interest expenses, because the proportion of the term-end outstanding balance of unearned lease fees to the term-end outstanding balance of tangible fixed assets is low.

1. Acquisition cost equivalent, accumulated depreciation equivalent, and term-end outstanding

balance equivalent of leased property (Unit: Millions of yen)

Acquisition

cost equivalent

Accumulated depreciation equivalent

Term-end outstanding balance

equivalent Tools, furniture & fixtures 105 85 20 Intangible fixed assets (Software) 117 106 10

Total 223 191 31 2. Term-end outstanding balance equivalent of unearned lease fees

Less than a year ¥27 million yen More than a year ¥ 3 million yen Total ¥31 million yen

3. Lease fees paid and accumulated depreciation equivalent

Lease fees paid ¥49 million yen Accumulated depreciation equivalent ¥49 million yen

4. Calculation method of amount equivalent to depreciation expenses

Straight-line method using a period of depreciation to the lease period with a remaining value of zero.


- 49 -

Note on trade with related parties

Attributes Names of the

companies Address

Capital or contribution to

capital

Business contents or profession

Ratio of voting rights

owned

Affiliated firm

AIDA HONG KONG LTD.

Hong Kong

HKD 660 thousand

Sale and service of press machines

100

Affiliated firm

AIDA AMERICA CORP.

Ohio, USA

US$ 42,102 thousand

Manufacture, Sale and service of press

machines 100

Affiliated firm

ACCESS LTD. Hakusan, Ishikawa

JPY 50 million

Manufacture and sales of control related parts/automatic

equipment systems

100

Affiliated firm

AIDA S.r.l. Brescia,

Italy EUR 24,000

thousand

Manufacture, sale and service of press

machines 100

Affiliated firm

AIDA ENGINEERING (M)

SDN.BHD.

Johor, Malaysia

RM 64,842 thousand

Manufacture and sale of press machines

100

Affiliated firm

AIDA GREATER ASIA PTE.LTD.

Singapore S$ 300

thousand Sale and service of

press machines 100

Detailed relationship

Interlocking directors, etc

Business relationship

Detailed transactions

Transaction amount

(million yen) Account Item

Closing balance

(million yen)

none (*1) Consignment of sales of our products

Sales 4,648 Accounts

receivable-trade 1,628

Collateral office: 1 person

(*1) Consignment of sales and manufacturing

of our products Sales 3,405

Accounts receivable-trade

1,626

Accounts payable-trade

790 Procurement 4,166

Advances received

626


(*1) Consignment of manufacturing of our

products

(*2)Rent expense 85 - -

(*3) Debt guarantee

2,315 - - Collateral office: 1 person


of our products Sales 2,618 Accounts




of our products Sales 1,423

Accounts receivable-trade

961

none (*1) Consignment of sales of our products

Sales 1,533 Accounts


Note1): The consigning and manufacturing of Company products are determined on the basis of

the same terms and conditions as those applied to common business transactions in view of the current market price.

Note2): Rent expense is determined on the basis of sundry expenses including depreciation, property tax expense and market average interest rate.

Note3): Debt guarantee is related to the bank transactions of AIDA S.r.l. Transaction amount is the

balance as of Mar 31, 2012.


- 50 -

Notes to per share information

Shareholders’ equity per share ¥658.62 Net Income per share ¥ 34.21

Note:

The number of treasury stocks as common stocks using for calculation of net assets per share and net assets per income, is excluded from ‘the number of common stocks for calculation of net assets per share’ and ‘the average number of common stocks ’, since our shares at 3,397,000 obtained by Trust Account E is treated as treasury stock as of March 31, 2012.

Note regarding important subsequent event

No applicable matters.


- 51 -

(English Translation of the Original Audit Reports Issued in Japanese)

Audit Report of Independent Accounting Auditors Regarding the Consolidated

Financial Documents

Report of Independent Auditors May 10, 2012

The Board of Directors AIDA ENGINEERING, LTD.

Ernst & Young ShinNihon LLC Seiji Yamamoto, Certified Public Accountant

Designated and Engagement Partner Takahiro Yamazaki, Certified Public Accountant

Designated and Engagement Partner

Pursuant to Article 444, Section 4 of the Corporation Law, we have audited the accompanying consolidated financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets and the notes to the consolidated financial statements of AIDA ENGINEERING, LTD. (the “Company”) applicable to the 77th fiscal year from April 1, 2011 through March 31, 2012.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the 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.

Auditors’ Responsibility Our responsibility is to express an opinion on the 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. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 financial position and results of operations of the AIDA Group, which consisted of the Company and consolidated subsidiaries, applicable to the 77th fiscal year ended March 31, 2012 in conformity with accounting principles generally accepted in Japan.

Conflicts of Interest We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document


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Audit Report of Independent Accounting Auditors

Report of Independent Auditors May 10, 2012

The Board of Directors AIDA ENGINEERING, LTD.

Ernst & Young ShinNihon LLC T Seiji Yamamoto, Certified Public Accountant

Designated and Engagement Partner Takahiro Yamazaki, Certified Public Accountant

Designated and Engagement Partner

Pursuant to Article 436, Section 2, Paragraph 1 of the Corporation Law, we have audited the accompanying financial statements, which comprise the balance sheet, the statement of income, the statement of changes in net assets, the notes to the financial statements and the related supplementary schedules of AIDA ENGINEERING, LTD. (the “Company”) applicable to the 77th fiscal year from April 1, 2011 through March 31, 2012.

Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules Management is responsible for the preparation and fair presentation of the financial statements and the related supplementary schedules 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 financial statements and the related supplementary schedules that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express an opinion on the financial statements and the related supplementary schedules 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 financial statements and the related supplementary schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the related supplementary schedules. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements and the related supplementary schedules, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements and the related supplementary schedules in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 financial statements and the related supplementary schedules. 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 financial statements and the related supplementary schedules referred to above present fairly, in all material respects, the financial position and results of operations of AIDA ENGINEERING, LTD. applicable to the 77th fiscal year ended March 31, 2012 in conformity with accounting principles generally accepted in Japan.

Conflicts of Interest We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

End of Document


- 53 -


Audit Report of the Board of Statutory Auditors

Audit Report Regarding the performance of duties by the directors for the 77th fiscal year beginning April 1, 2011, and ending

March 31, 2012, the Board of Statutory Auditors hereby submits its audit report, which has been prepared through

discussions based on reports from the respective statutory auditors concerning the methods and results of audits

performed.

1. Manner and description of audit implemented by Auditors and Board of Auditors

The Board of Statutory Auditors defined the audit policy and audit plan and received reports on the state of the

audit implementation from each statutory auditor. In addition, the board received reports on the execution of

duties from the board members and the accounting auditors and sought explanations when necessary.

Based on the standards of the audit as determined by the Board of Statutory Auditors, each statutory auditor

conducted interviews with directors, the internal audit department, and the other employees, collected information,

and organized the audit environment according to the audit policy and plan. The auditors also attended board

meetings and other important meetings and received reports on the performance of their duties, sought

explanations when necessary, viewed important documents relating to financial decisions, and studied the

operation and the financial positions at headquarters and the main places of business. The board also monitored

and verified the contents of board resolutions on the organization of the (internal control) system specified in the

Companies Law, Article 100, Paragraph 1 and 3, as necessary to ensure that the board members complied with all

laws and regulations and to ensure the appropriateness of the operations of the corporation as well as the state of

the system based on this resolution. With respect to internal control related to financial reporting based on

Financial Instruments and Exchange Act, we received reports from Directors and other relevant personnel, and

Ernst & Young ShinNihon LLC on the status of assessment and audit on the relevant internal controls and requested

explanations when necessary. It also discussed the Companies Law, Article 118 Section 3 (a), Basic policy, and

Section 3(b) Engagement based on the state of discussions with the board of directors. Regarding the subsidiaries,

the board of auditors interviewed the directors and exchanged information, received reports on business and

studied the operation and the financial positions at their offices when necessary. Based on the above method, the

business reports and the annexed specifications were discussed.

Furthermore, the board monitored and verified that the accounting auditors maintained independent positions and

performed an appropriate audit. It also received reports on the performance of their duties from the accounting

auditors and sought explanations when necessary. It also received notice of compliance with the "system to secure

appropriate performance of duties" (from Corporate Calculation Regulation Article 131) according to "Quality

Control Standard regarding Audit" (Statement issued by Business Accounting Deliberation Council on October 28,

2005), and sought explanations when necessary.

Based on the above method, the financial documents (including balance sheet, profit and loss statement, statement

of changes to shareholders’ equity, and individual note table), their annexed specifications and consolidated


- 54 -

financial documents (including the consolidated balance sheet, consolidated statement of income, consolidated

equity capital change statement, and the consolidated table of notes) regarding this business year have been

examined.

2. Audit results

(1) Audit results of business reports, etc.

1. The business report and its annexed specifications correctly represent the state of the company according to

the laws and regulations.

2. There was no act of dishonesty or significant fact regarding the performance of their duties in breach of laws

and regulations by the directors.

3. The board resolution regarding the internal control system was appropriate. There is nothing to state about the

performance of the directors' duties with regard to this internal control system, including those regarding

internal controls related to financial reporting.

4. There is nothing to state regarding the basic policy on how personnel determine company financial and

business policies described in the business report. It is admitted that the approaches of the Companies Law,

Article 118, Section 3 (c), described in the business report are in accordance with this basic policies and do not

impair the profit of shareholders. They do not intend to maintain the position of our corporate directors.

(2)Audit results of financial documents and their annexed specifications

In our opinion, the method and the results employed by the accounting auditors, Ernst & Young ShinNihon

LLC, are fair and reasonable.

(3) Audit results of consolidated financial documents

In our opinion, the method and the results employed by the accounting auditors, Ernst & Young ShinNihon

LLC, are fair and reasonable.

May 14, 2012

Aida Engineering, Ltd.

Board of Statutory Auditors

Standing Statutory Auditor (outside auditor)

Shigeo Matsumoto

Statutory Auditor (outside auditor)

Yoshihiro Masuoka

Statutory Auditor (outside auditor)

Kimio Oiso

End of Document

(FOR REFERENCE PURPOSES ONLY)

- 55 -

<Reference information>

Topics

AIDA’s High-Capacity Low-Speed, High Torque Servo Motors Receives the 2011 ‘Outstanding Manufacturing Award” in the division of Machinery Parts and Components This is to inform you that the high-capacity low speed, high torque servo motors developed by our company have been awarded the 2011 ‘Outstanding Manufacturing (CHO-MONODZUKURI) Award” in the division of Machinery Parts and Components. This award is sponsored by the Conference for the Promotion of “Individual Creativity” and the Nikkan Kogyo Shimbun newspaper. When AIDA first began developing servo presses in the 1990s there were no optimal servo motors in existence, and thus AIDA took up the challenge of developing its own servo motors. This led to the development of AIDA’s high-capacity low speed, high torque servo motors. This was followed by the in-house development of not only motors but also the servo amps, power supplies, motor controllers and energy management systems. These were incorporated into a complete servo package and thus AIDA was able to offer a revolutionary system that could not only meet the requirements of presses but also the requirements of many different industries such as the large industrial machine industry.


- 56 -

Profiles of the Company’s Main Facilities

Our group develops and manufactures at the Sagami facility, Tsukui facility and Shimokuzawa facility in Midori-ku, Sagamihara City, Kanagawa Prefecture, and also at Hakusan facility in Hakusan City in Ishikawa Prefecture.

Domestic production facilities Sagami Facility

- Address: 2-10 Ohyama-cho, Midori-ku, Sagamihara, Kanagawa Prefecture - Tel: +(81) 42-772-5231 - Fax: +(81) 42-772-5263 - Major business: Development, design, manufacture and sale of large forming systems for

components by plastic working

DSF-U1-6000 for high-precision forming and DSF-S4-23000 for auto body forming Tsukui Facility

- Address: 1752 Negoya, Tsukui-cho, Midori-ku, Sagamihara, Kanagawa Prefecture - Tel: +(81) 42-784-2201 - Fax: +(81) 42-784-2315 - Major business: Development, design, manufacture, and sales of plastic processed components

and motor core, and IT-related microscopic parts molding systems

Robot lines of DSF-C1-1500 and DSF-N1-2000


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Sales and Customer Service Headquarters (Customer Service Department)

- Tel: +(81) 42-784-5523 - Fax: +(81) 42-784-5563

- Major business: maintenance and retrofitting of press, sale of spare parts

supporting customer’s production activities ranging from maintenance and inspection, rebuild, to consulting for environmental issues

Forming Engineering Center

- Tel: +(81) 42-784-3870 - Fax: +(81) 42-784-5531

- Major business: research and development of manufacturing methods and manufacture and sale

of molds

Automotive molds


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Shimokuzawa Facility

AIDA BUSINESS CORP. (our subsidiary:Used Press Division)

- Address: 1662 Shimokuzawa, Midori-ku, Sagamihara, Kanagawa Prefecture

- Tel: +(81) 42-784-7030 - Fax: +(81) 42-784-7174

- Major business: sale of used press machines

Note: The head office of the company above is located in Sagami Facility of AIDA

ENGINEERING, LTD.

A factory of AIDA BUSINESS CORP. (Used Press Division)

Hakusan Facility

Access Ltd. (our subsidiary)

- Major business: manufacture and sale of electronically controlled equipment and automatic

equipment systems

- Address: 1080 Kouzu-machi, Hakusan, Ishikawa Prefecture

- Tel: +(81) 76-274-8200

- Fax: +(81) 76-274-8210

Large-sized straightener feeder lines to handle wide high-tensile steels


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Global production facilities

Our Group has plants in main market areas in the Americas, Europe, and Asia. Coupled with our plants in Japan, we develop and manufacture through this four-pillared system of global production.

North America AIDA-America Corp. - Address: 7660 Center Point 70 Blvd., Dayton, Ohio, 45424-6380, U.S.A. - Tel: +(1) 937-237-2382 - Fax: +(1) 937-237-1995 - Major business: Manufacture, sale, and servicing of presses

Europe

AIDA S.r.l. - Address: Via Brescia, 26 25020 Pavone Mella (BS), Italy - Tel: (39) 030-9590111 - Fax: (39) 030-9959377 - Major business: Manufacture, sale, and servicing of presses


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Asia AIDA Engineering (M) SDN.BHD. - Address: Plo 524, Jalan Keluli,81700 Pasir Gudang, Johor, Malaysia - Tel: +(60) 7-251-6688 - Fax: +(60) 7-252-0688 - Major business: Manufacture and sale of press machines

AIDA Press Machinery Systems Co., Ltd. - Address: No.68 JiMei Road, Marine Industry, Park Nantong, Jiangsu Province China - Tel: +(86) 513-5100-6588 - Fax: +(86) 513-5100-6018 - Major business: Manufacture and sale of press machines


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Global sales / customer service facilities

The AIDA Group, with sales and customer service facilities throughout the world other than the manufacturing facilities shown above, is maintaining close relationships, and our professional service is always rendered to our valued customers.

ASIA EUROPE･NORTH AFRICA

NORTH AMERICA SOUTH AMERICA

※Red: Production facilities Blue: Sales and customer service facilities


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Information for the Shareholders Accounting year From April 1 to March 31 next year Record date for dividend from retained earnings

March 31

Ordinary General Shareholders' Meeting

In June

One unit (tangen) of shares 100 shares Administrator of shareholder registry

2-1, Yaesu 1-chome, Chuo-ku, Tokyo Mizuho Trust & Banking Co., Ltd.

Accounts with a securities company

Special accounts

Mailing Address

8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-8507 Mizuho Trust & Banking Co., Ltd. Stock Transfer Agency Department

Inquiry by phone Phone: 0120-288-324 (toll-free)

Intermediary offices (various registration

such as change of address, receiving

method of dividend)

Your securities company Mizuho Investors Securities Co., Ltd. Main branch and branches nationwide, the Planet Booth (shop in Mizuho Bank) Mizuho Trust & Banking Co., Ltd. Main branch and branches nationwide

Payment of unpaid dividends

In addition to those shown above, main branch and branches of Mizuho Bank (Mizuho Investors Securities acts as an agency only.)

Notes

For issuance of a payment statement, contact Mizuho Trust & Banking Co., Ltd./Mizuho Investors Securities Co., Ltd. at the address, telephone number, or agency listed for special accounts.

In special accounts, share trading is limited to purchases of fractional shares. If needed, open an account at a securities company, and apply for the book-entry transfer of the shares. In case of procedure for the purchase of shareholding of less than one unit at Mizuho Investors Securities Co., Ltd,, all payment due shall be made to the designated bank account of Mizuho Trust & Banking Co., Ltd. ,

Public announcement method

To be published by electronic notification (http://www.aida.co.jp/ir/koukoku/index.html). However, if public announcement cannot be made by electronic notification, it will be placed in the Nihon Keizai Shinbun (daily newspaper).