TOYOBO CO., LTD. CONSOLIDATED FINANCIAL ......March 31, 2013 and 2012 Disclaimer Regarding Forward-Looking Statements This report describes not only the past and present facts about

Financial Section

TOYOBO CO., LTD.

CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013 and 2012

Disclaimer Regarding Forward-Looking Statements This report describes not only the past and present facts about Toyobo Co., Ltd. and its affiliates (Together, the “Toyobo Group”), but also projects future business performance and forecast the future business environment. Such projections of future business performance and forecasts of the future business environment include assumptions and evaluations that were developed based on information that Toyobo was able to obtain as of the time this report was printed, and thus contain unknown as well as known risks and uncertainties. Consequently, there is a possibility that these risks and uncertainties will render the projections and forecast inaccurate and result in actual future business performance and the business environment significantly different from the projections and forecast presented in this report. Readers are thus advised to exercise caution. The projections of future business performance and forecasts of the future business environment that are found in this report were developed based on information that our corporation was able to obtain at the time the descriptions were printed. These projections and forecast therefore contain elements of uncertainty. Moreover, there is a possibility that latent risks that have the potential of rendering such projections and forecasts inaccurate will materialize. Please be fully advised that in the future the actual business performance and environment could turn out to be different from the projections and forecast presented in this report.

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CONTENTS

Management’s Discussion and Analysis 3

Consolidated Financial Highlights 9

Financial Section 10

Consolidated Balance Sheets 11

Consolidated Statements of Income 13

Consolidated Statements of Comprehensive Income 14

Consolidated Statements of Changes in Net Assets 15

Consolidated Statements of Cash Flows 17

Notes to Consolidated Financial Statements 18

Independent Auditors’ Report 44

TOYOBO CO., LTD.

CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013 and 2012

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Management’s Discussion and Analysis

Overview of Fiscal Year Ended March 31, 2013 The business environment for the Toyobo Group through the end of fiscal year, ended March 31, 2013, was characterized by moderate recovery in

the Japanese economy as a result of reconstruction work following the Great East Japan Earthquake and the positive effects of policies to revitalize

consumer spending through eco-car subsidies and other measures. However, future trends continued to be uncertain in part because of the effects

of the prolonged appreciation of the yen, concerns about shortages of electric power, boycotts of Japanese products in China and other issues.

However, during the fourth quarter, positive expectations emerged regarding the economic policies of the new government and signs of recovery

began to appear along with positive developments such as the downward correction in the value of the yen and increases in stock prices. In the

world economy, however, uncertain conditions continued along with the slowing of economic growth in China and emerging markets, other Asian

countries the prolonged debt issues faced by some European governments, and other factors.

Amid this operating environment, the Toyobo Group aims to become “The category leader that continues to create new value that contributes to

society in the environment, life science and high-function products fields.” Accordingly, Toyobo is undertaking with activities targeted at further

expanding its businesses by developing specialty products and increasing their sales in domestic and overseas markets. In the environment field,

Toyobo’s accomplishments have been recognized. Its reverse osmosis membranes for seawater desalination have been selected for use in the

largest desalination plants in Saudi Arabia. In the life science field, Toyobo successfully developed and began to market “Nerbridge,” the first

medical treatment device in Japan for the regeneration of damaged peripheral nerves. In the high-function product field, Toyobo has worked to

develop and expand sales of new products such as film for LCDs with new optical properties and shrink film for plastic bottles that are thinner and

stronger, and that contribute to increased productivity. In addition, Toyobo worked to further expand its overseas business activities. Toyobo’s

facilities in China and the United States for the manufacturing of airbag fabrics have gone into full production. Moreover, to gain a foothold in the

shrink film market in China, which is expected to expand in the year ahead, Toyobo decided to invest with a South Korean film manufacturer in a

joint venture in China. In sum, the Toyobo Group is addressing business issues as well as implementing measures and improvements that will lead

to further growth and expansion. However, although recovery was in progress in the second quarter, even after factoring in the effects of lower

shipments in the first quarter, but deterioration of Japanese-Chinese relations emerged from the beginning of the third quarter. As a result,

consolidated net sales for the subject fiscal year decreased ¥10.5 billion (3.0%) from the previous fiscal year to ¥339.0 billion, with operating income

down ¥1.2 billion (6.7%) to ¥17.1 billion and net income of ¥7.6 billion. On April 1, 2012, the Company implemented a reorganization.

Accompanying this change, the results for the previous fiscal year were also restated to reflect this reclassification.

Films and Functional Polymers Within this segment, in the functional polymers business, although business performance generally, proceeded steadily, especially in products sold

to the automotive industry, sales in the films business were lackluster because of weak sales of packaging films. As a result, overall sales declined

and operating income decreased as a whole.

In the films business, although sales in the packaging films business were recovering because of expansion in sales of newly developed products,

sales showed a substantial decline from the third quarter in part because of the difficulty in passing higher raw materials costs on to customers. In

the industrial films business, sales in unit terms recovered, driven by increased exports to South Korea and Taiwan as well as domestic sales of

smartphones and tablet PCs. In films for LCDs, the principal use of these products, we launched in the latter half of the third quarter a new product

with special optical properties not previously available in PET films. In the functional polymers business, sales of industrial adhesive “VYLON” for

electronic components to China were favorable through the second quarter. However, sales were adversely influenced by the deterioration of the

Chinese market in the third quarter. In the engineering plastics business, sales of products principally for automotive uses were adversely influenced

in the third quarter by boycotts of Japanese products in China. Signs of recovery, however, emerged in the fourth quarter.

As a result, sales in this segment decreased ¥1.0 billion (0.8%) from the previous fiscal year to ¥137.4 billion, while operating income decreace ¥0.9

billion (11.0%) to ¥7.6 billion.

Industrial Materials Although the airbag business and the high-performance fiber business showed favorable expansion in sales and operating income,

performance in the tire cord business was lackluster, and environment-related businesses in this segment were adversely affected

by the stagnation of conditions in the Chinese market. Nevertheless, sales were up and operating income increased.

In the airbag fabrics business, performance held firm, in part because of the recovery in demand in the U.S. market. Conditions in

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the tire cord business were affected adversely by changes in the procurement method, resulting in a major decline in sales. In the

high-performance fiber business, sales of ultra-high-strength polyethylene fiber “Dyneema” were influenced by market stagnation

through the third quarter, but sales of “ZYLON” for applications requiring a high level of heat resistance expanded. In the functional

filters business, operating conditions continued to be difficult because of stagnation in the European markets and the postponement

of capital investments by customers in China. Overall, sales in this segment increased ¥0.7 billion (0.9%) from the previous fiscal

year to ¥71.9 billion, with operating income rising ¥0.1 billion (2.1%) to ¥5.5 billion.

Life Science Sales in this segment were lower than forecasted in the first quarter. In the second quarter, however, performance in the

bioproducts business and the contract manufacturing of pharmaceuticals business was favorable. As a result, although sales

declined from the same period of the previous fiscal year, operating income increased.

In the bioproducts business, sales of mainstay enzymes for diagnostic reagents began to recover in the second quarter and

performed favorably. In the medical business, orders for the contract manufacturing of pharmaceuticals continued to be strong. In

the medical device business, Toyobo became the first company in Japan to receive a manufacturing permit from the Ministry of

Health, Labor and Welfare for its “Nerbridge,” a device for the regeneration of damaged peripheral nerves, and began marketing

this product in the fourth quarter. In the functional membranes business, sales of membranes for medical use declined because of

inventory adjustments among users in the first quarter. In the water treatment membrane business, shipments related to a major

order for membrane units for seawater desalination plants began in the fourth quarter.

Overall, sales in this segment declined ¥1.7 billion (6.6%) from the previous fiscal year to ¥24.8 billion, yet operating income

increased slightly, up ¥0.0 billion (0.9%) to ¥4.2 billion.

Textiles Sales in this segment contracted in comparison with the same period of the previous year, and operating income decreased.

Sales of sports apparel were steady, but the nylon-related business experienced difficult conditions because of market weakness.

Sales of fabrics for traditional Arabic menswear expanded in volume, and, in the fourth quarter, a downward correction in the value

of the yen resulted in improvement in profitability. In the acrylic fiber business, sales in unit terms slowed because of stagnant

demand in China through the second quarter, but, from the third quarter, sales recovered. In addition, in the first quarter, some

subsidiaries of the Toyobo Group began to review the life cycles of their products, take account of the weak domestic consumer

spending on these items and report inventory valuation losses. As a result, sales in this segment decreased ¥8.8 billion (10.0%)

from the previous fiscal year to ¥79.2 billion, with operating income down ¥0.8 billion (79.9%) to ¥0.2 billion.

Real Estate and Other Businesses This segment includes infrastructure related businesses such as real estate, engineering, information processing services and

logistics services. Results in these businesses were in line with plans. Sales in these segments increased ¥0.4 billion (1.6%) from

the previous fiscal year to ¥25.7 billion, and operating income rose ¥0.3 billion (10.6%) to ¥2.7 billion.

Operating Income Gross profits for the subject fiscal year decreased ¥3.4 billion (4.5%) from the previous fiscal year to ¥71.3 billion, mainly because

sales in the films packaging business were lackluster and some of the subsidiaries of the Toyobo Group began to review the life

cycles of their products, take account of the weak domestic consumer spending on these items and report inventory valuation

losses. Selling, general and administrative expenses for the subject fiscal year decreased ¥2.2 billion (3.8%) from the previous

fiscal year to ¥54.2 billion mainly because employment cost and research and development expenses decreased. Overall,

operating income for the subject fiscal year declined ¥1.2 billion (6.7%) from the previous fiscal year to ¥17.1 billion.

Other Income (Expenses) The balance of other income (expenses) for the subject fiscal year yielded net other expenses of ¥15.6 billion, compared with net

other expenses of ¥25.8 billion the previous fiscal year.

Toyobo recorded gains of ¥0.4 billion on sales of noncurrent assets through gain on sales of investment securities. However, these

were offset by ¥1.3 billion in losses on lawsuits in the U.S. on bulletproof vests using “ZYLON” fiber, ¥1.7 billion on lower fee and

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¥1.6 billion on disposal loss from disposing of noncurrent assets owned by Toyobo and its consolidated subsidiaries.

Net Income For the subject fiscal year, Toyobo posted net income of ¥7.6 billion, up ¥3.1 billion from the previous fiscal year. Net income per

share for the subject fiscal year increased from ¥5.17 in the previous fiscal year to ¥8.61.

Cash Flows Net cash provided by operating activities amounted to ¥30.4 billion at the end of the subject fiscal year. This consisted mainly of

¥12.8 billion before income taxes ¥13.2 billion in depreciation and amortization and ¥6.2 billion decrease in inventories.

Net cash used in investing activities amounted to ¥11.3 billion. This consisted mainly of ¥16.5 billion in expenditures for the

acquisition of property, plant and equipment and ¥3.9 billion in gain on sales of investment securities.

Net cash used in financing activities amounted to ¥2.6 billion. This consisted mainly of ¥29.3 billion in expenditures for repayment

of long-term debt and ¥20.3 billion in proceeds from long-term debt.

As a result, the balance of cash and cash equivalents at the end of the fiscal year ended March 31, 2013 was, ¥26.5 billion, an

increase of ¥17.0 billion from the end of the previous fiscal year.

Assets, Liabilities and Net Assets Total assets at the end of the fiscal year ended March 31, 2013 increased ¥9.6 billion (2.2%) from the end of the previous fiscal year

to ¥447.4 billion. This was due mainly to increase in cash and deposits. Total liabilities increased ¥1.8 billion (0.6%) to ¥291.9 billion

due mainly to an increase in new bond issues. Total net assets increased ¥7.8 billion (5.3%) to ¥155.5 billion due mainly to an

increase in retained earnings and in valuation difference on available-for-sale securities.

Forecast for Fiscal Year Ending March 31, 2014 During the fiscal year ending March 31, 2014, important developments in the operating environment are expected to include further

economic growth in emerging, including the ASEAN economies, and moderate recovery in the Japanese economy due to the

downward correction in the value of the yen, expansion in government public works investment and other developments. However,

the outlook is for continued uncertainty in the business environment because of rising prices of raw materials, concerns about

financial instability in Europe and other factors.

In view of this outlook for the operating environment, the Toyobo Group will continue to strengthen its earnings base to cope with

changes in the external environment. The Group aims to become “the category leader that continues to create new value that

contributes to society in the environment, life science and high-function products fields.” The Group will continue to work to further

enhance its profitability by focusing its management resources on businesses that are profitable and have high growth potential, as

it aggressively expands its business activities in Japan and overseas and improves its business portfolio by measures such as

increasing the efficiency of its capital and strengthening its financial position.

Considering such factors, for the fiscal year ending March 31, 2014 the Toyobo Group is forecasting consolidated net sales of

¥350.0 billion (up ¥11.0 billion year on year), with operating income of ¥22.0 billion (up ¥4.9 billion) and net income of ¥9.5 billion (up

¥1.9 billion).

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Risk Factors The Toyobo Group is exposed to the following risks that may affect its operating results and financial status. The future matters specified in the

following are based on information that was available as of the end of the subject fiscal year as well as certain assumptions that serve as the basis

for its judgments.

(1) Worsening Political & Economic Situations In Japan and overseas, the Toyobo Group produces and sells in Japan and overseas a wide range of products in the films and functional polymers,

industrial materials, life science and textile fields. In the event of political turmoil or a serious economic recession in the countries in which our

production bases are located or in major markets, our operating results or financial status may be seriously influenced by such events through the

impact on our production and sales.

(2) Decline of Retail Prices The wide range of products sold by the Toyobo Group in Japan and overseas in the films and functional polymers, industrial materials, life science

and textile fields are in competition with the products of other companies. Price cuts by our competitors may cause a decline in our retail prices or a

decrease in our sales volume. In our medical business, our retail prices may drop due to lowered official price standards. Our operating results or

financial status may be seriously influenced by such circumstances through a sales decrease.

(3) Business Downturn or Retreat by Major Customers Although the Toyobo Group sells a wide range of products in the films and functional polymers, industrial materials, life science and textile fields, to

a variety of customers both in Japan and overseas, certain products are sold to specific significant customers. In the event that such customers face

a downturn in business, retreat from business, cut back inventories significantly, demand drastic rate reductions or request substantial production

adjustments, our operating results or financial status may be seriously influenced by such events through a sales decrease.

(4) Tariff Hikes and Import Regulations in Overseas Major Markets Because the Toyobo Group sells a wide range of products in the films and functional polymers, industrial materials, life science and textile fields in

Japan and overseas, tariff hikes or import regulations on quantity limits be imposed under antidumping laws in major overseas markets that could

seriously affect our business and financial condition.

(5) Alteration of Credit The Toyobo Group has made provisions for bad debt losses based on past default ratios and strives to minimize its credit risk under the credit

management regulations by setting credit limits for each customer and other means. However, in the event of the bankruptcy of major customers

due to economic recession or other reason, our operating results or financial status could be seriously influenced by bad debt loss that substantially

exceeds the amount of provisions made.

(6) Product Defects To prevent product defects, the Toyobo Group produces its products in the films and functional polymers, industrial materials, life science and textile

fields in accordance with specific quality control standards under the control of Global Environment and Safety Committee and Product Liability

Prevention/Quality Assurance Committee and is covered by product liability insurance. However, it cannot be guaranteed that all of our products are

free from all defects, that there will be no defective products in the future or that compensatory payment would be fully covered by the insurance. In

the occurrence of material product defects, our operating results or financial status could be seriously influenced by large liability payments or loss

of credit.

(7) Purchases of Raw Materials The Toyobo Group purchases raw materials from various suppliers in order to produce its wide range of products in the films and functional polymers,

industrial materials, life science and textile fields. Although major materials are provided by a number of suppliers in part due to risk management

considerations, there remains a risk that we may not be able to purchase a sufficient volume of raw materials should suppliers fail, withdraw from the

business, etc. Even if we can purchase such materials, purchase prices may rise suddenly. In either event, our operating results or financial status

could be seriously influenced by the cost increases or production cutbacks.

(8) Intellectual Property The Toyobo Group works to actively expand the scale of its businesses for highly functional products where we enjoy a strong competitive

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advantage, drawing on its core technologies of polymerization, modification, processing and biotechnology. For this reason, we endeavor to build

and protect technology and know-how differentiated from those of our competitors’ products in fibers and textiles, polymer and bio-medical fields.

However, there is a risk in certain areas that we may not be able to prevent the production and sale of similar products, the violation of a patent, or

the use of confidential business information by a third party. Although we observe the intellectual property rights of other companies, we are not free

from the possibility that we might infringe the intellectual property rights of other companies as we develop our products are technology. In the event

that our intellectual property rights are infringed or we infringe the rights of other companies, our operating results or financial status could be

seriously influenced by a sales decrease or liability payments.

(9) Development of New Products and New Uses As part of the Toyobo Group’s commitment to being a specialty business conglomerate, our research and development investment targets high

functional products for which we have a strong competitive advantage, including products in the films and functional polymers, industrial materials,

life science and textile fields, drawing on our core technologies of polymerization, modification, processing and biotechnology. ” However, it is not

guaranteed that our investment will always lead to the successful development of new products or new uses for existing products. Our operating

results or financial status could be seriously influenced under such unsuccessful circumstances by a decline in our future growth and profitability.

(10) Public Regulations The Toyobo Group conducts production activities and other corporate activities in various locations in Japan and abroad, and operates its business

under various public regulations on business licensing, tax, environment and chemical substance-related issues, etc. If water restrictions or other

regulations related to the environment become tighter in areas where our major business sites are located, substances currently being used become

prohibited, or regulations regarding usage levels are implemented, our operating results or financial status could be seriously influenced by

restrictions imposed on our production activities or other corporate activities, or by being forced to make large capital investments, tax payments or

other expenditures in order to comply with the regulations.

(11) Litigation The Toyobo Group conducts production activities and other corporate activities in various domestic and overseas locations. In this process, there is

a possibility that lawsuits may be brought against us in connection with product liability, the environment, labor, intellectual property or other areas.

Should a lawsuit be filed against the Toyobo Group, we intend to defend ourselves properly and establish the fact that the claims against us are

meritless. However, in case we or TOYOBO AMERICA, INC. loses a suit, our business and financial conditions could be seriously affected by the

compensation claims of plaintiffs.

(12) Foreign Exchange Rate Fluctuation The Toyobo Group’s operations include the production and sale of products in foreign markets and required the use of foreign currency. Substantial

fluctuations in the foreign exchange rates, could negatively affect operating results or financial status by causing a sales decrease, cost increase or

lowered price competitiveness after conversion to yen.

(13) Major Interest Rate FluctuationsThe Toyobo Group strives to reduce its interest-bearing debt and arrange for borrowings at fixed interest rates. However, if interest rates rise

substantially above current levels, consequences would include a corresponding substantial rise in interest payable. These circumstances could

have a material effect on our operating results and financial status.

(14) Substantial declines in stock prices The Toyobo Group holds a significant volume of stocks that are traded on exchange markets. If when the prices of these stocks decline by a large

margin, net unrealized holding gains on securities may decrease, and losses may be recorded when these stocks are sold. These circumstances

could have a material effect on our operating results and financial status.

(15) Substantial Decline of Land Prices The Toyobo Group owns a great deal of land, most of which has already been revaluated pursuant to the Land Revaluation Law. If land prices

decline substantially, our operating results or financial status could be seriously influenced by a loss in value or losses incurred when selling.

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(16) Severance and Retirement Benefit Obligations and Expenses The Toyobo Group calculates severance and retirement benefit obligations and expenses by using various standard rates of return on pension

assets and other indicators. If assumptions for pension actuarial calculations are altered, changes could result in the market value of pension assets,

interest rates fluctuate, changes could be made in the retirement and pension systems, or other circumstances could occur. Such changes could

result in increases in severance and retirement benefit obligations and/or increases in severance and pension expenses (the portion of actuarial

differences that are treated as expenses). These circumstances could have a material effect on the Group’s operating results and financial status.

(17) Funding and Debt RatingsThe Toyobo Group’s borrowings include syndicated loans, and these loans are subject to financial covenants. If, as a result of deterioration in Group

performance or other factors, these covenants are violated, our obligations with respect to relevant loan repayments could be accelerated upon

request from the lending financial institutions, and the circumstances could have a material effect on our operating results and financial status. In

addition, in the event that credit rating agencies lower our credit rating(s), it is believed possible that this could have a major effect on our ability to

raise funds as well as other implications.

(18) Deferred Tax AssetsThe Toyobo Group reports certain deferred tax assets on its balance sheets, including losses carried forward for tax purposes and temporary

differences to be deducted from tax liabilities in future periods. Deferred tax assets are reported after consideration of the possibility of recovery

based on forecasts of future taxable income. However, when it becomes necessary to reconsider the possibility of recovery of deferred tax assets

because of changes in the outlook for future taxable income and/or when there are revisions in the taxation system, including changes in the tax

rates and/or deferred tax assets are exercised to reduce tax liabilities, then these circumstances could have a material effect on our operating

results and financial status

(19) Accidents and Disasters The Toyobo Group conducts production activities and other corporate activities at various domestic and overseas locations. We carry out strict plant

control and strive to prevent damage caused by accidents and disasters at these production facilities and business sites. However, if a massive

earthquake, wind and flood damage, snow damage, other natural disaster, of incidence of infectious diseases such as pandemic flu occurs at

production facilities or business sites or the site of a business partner, our operating results or financial status may be seriously influenced as our

production activities may be interrupted.

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Consolidated Financial Highlights TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Years ended March 31, 2013 and 2012

Millions of yen Thousands of U.S. dollars (Note 1)

2013 2012 2013

Net sales ¥339,009 ¥349,505 $3,604,561

Cost of sales 267,694 274,803 2,846,295

Income before income taxes 12,774 10,863 135,821

Net income 7,639 4,587 81,223

Total assets 447,445 437,841 4,757,523

Total net assets ¥155,522 ¥147,724 $1,653,610

Yen U.S. dollars (Note 1)

Net income per share ¥8.61 ¥5.17 $0.092

Note 1. The U.S. dollar amounts in this report represent translations of yen for convenience only at the rate of ¥94.05 to U.S.$1.00.

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Financial Section CONSOLIDATED FIVE-YEAR SUMMARY TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Fiscal years ended March 31, 2013, 2012, 2011, 2010 and 2009

Millions of yen, except per share information

2013 2012 2011 2010 2009

For the year: Net sales ¥339,009 ¥349,505 ¥340,573 ¥318,773 ¥367,271

Cost of sales 267,694 274,804 264,980 253,695 295,877

Selling, general and administrative expenses 54,234 56,396 54,703 53,609 60,166

Operating income 17,081 18,306 20,890 11,469 11,228

Other expenses 4,307 7,442 15,899 11,724 31,966

Income (loss) before income taxes and minority interests 12,774 10,863 4,991 (255) (20,738)

Provision for income taxes 4,398 5,142 (89) (2,612) (6,206)

Net income (loss) 7,639 4,587 4,155 2,094 (12,505)

Comprehensive income（Note1) ¥11,097 ¥9,065 ¥5,416 －－

Net income (loss) per share (yen) ¥8.61 ¥5.17 ¥5.49 ¥2.88 (¥17.92)

At the end of the year: Total current assets ¥184,739 ¥177,736 ¥172,001 ¥157,329 ¥160,238

Property, plant and equipment 202,273 199,789 203,751 210,251 216,354

Total assets 447,445 437,841 443,516 438,439 443,816

Total long-term liabilities 127,093 127,267 130,299 143,788 154,772

Total net assets ¥155,522 ¥147,724 ¥149,773 ¥131,097 ¥133,967

Note1. Effective from the year ended March 31, 2011, the Toyobo Group adopted Accounting Standards Board of Japan (ASBJ) Statement No. 25,

“Accounting Standard for Presentation of Comprehensive Income,” June 30, 2010.

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Consolidated Balance Sheets TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES

March 31, 2013 and 2012


ASSETS 2013 2012 2013

Current assets: Cash and cash equivalents (Note 3, 11 and 18) ¥26,600 ¥9,608 $282,828 Notes and accounts receivable: Trade (Note 3) 74,598 75,542 793,174

Other 3,837 4,535 40,797 Allowance for doubtful receivables (198) (196) (2,105)

78,237 79,881 831,866 Inventories (Note 6) 71,009 77,573 755,013

Deferred income taxes (Note 8) 6,291 7,373 66,890 Other current assets (Note 11) 2,602 3,301 27,666

Total current assets 184,739 177,736 1,964,263

Investments and other assets: Investment securities (Note 3 and 4) Unconsolidated subsidiaries and affiliates 10,478 8,064 111,409

Other 17,326 16,516 184,221 Loans 1,379 1,500 14,662 Deferred income taxes (Note 8) 16,636 18,828 176,885 Other 14,597 15,203 155,205

Allowance for doubtful accounts (1,225) (1,401) (13,025)

59,191 58,710 629,357

Property, plant and equipment (Note 7 and 11): Land (Note 16) 106,215 106,659 1,129,346 Building and structures 132,658 130,455 1,410,505 Machinery and equipment 335,253 332,086 3,564,625

Tools, furniture and fixtures 22,345 21,750 237,586 Lease assets 8,710 8,466 92,610 Construction in progress 9,303 5,427 98,915

614,484 604,843 6,533,587

Less accumulated depreciation 412,211 405,054 4,382,892

202,273 199,789 2,150,695

Other assets: Intangible assets 733 917 7,794 Goodwill 284 454 3,020 Lease assets 226 235 2,403

1,243 1,606 13,217

Total assets (Note 15) ¥447,446 ¥437,840 $4,757,532

See accompanying Notes to Consolidated Financial Statements.

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LIABILITIES AND NET ASSETS 2013 2012 2013

Current liabilities: Short borrowing (Note 3 and 9) ¥51,211 ¥51,432 $544,508

Long-term debt due within one year (Note 3, 9 and 11) 31,815 28,132 338,278

Notes and accounts payable:

Trade (Note 3 and 11) 48,452 47,741 515,173

Other 13,876 15,858 147,539

62,328 63,599 662,712

Employees' savings deposits 5,304 5,371 56,396

Customers' deposits (Note 11) 7,184 7,933 76,385

Accrued employees' bonuses 4,028 4,089 42,828

Accrued income taxes 1,726 1,040 18,352

Deferred income taxes (Note 8) 0 8 0

Other current liabilities 1,235 1,246 13,131

Total current liabilities 164,831 162,850 1,752,590

Long-term liabilities: Long-term debt due after one year (Note 3, 9 and 11) 72,278 69,833 768,506

Deferred income taxes (Note 8) 2,721 2,897 28,931

Deferred income taxes on land revaluation (Note 8 and 16) 24,678 24,673 262,392

Employees' severance retirement benefits (Note 10) 17,576 17,302 186,879

Directors’ and statutory auditors’ retirement benefits 379 444 4,030

Negative goodwill 1,258 2,204 13,376

Provision for environmental measures 1,771 1,931 18,830

Lease obligations 2,553 3,925 27,145

Other long-term liabilities 3,879 4,058 41,244

Total long-term debt 127,093 127,267 1,351,333

Contingent liabilities (Note 13)

Net assets: Common stock Authorized－2,000,000,000 shares Issued－890,487,922 shares in 2013 and 2012 51,730 51,730 550,027

Capital surplus 32,239 32,227 342,786

Retained earnings (deficit) 21,568 17,042 229,325 Less treasury stock, at cost

(2,039 thousand shares in 2013 and 3,822 thousand shares in 2012) (295) (559) (3,137)

Shareholders’ equity 105,242 100,440 1,119,001

Valuation difference on available-for-sale securities 2,815 1,038 29,931

Deferred losses on hedges (72) (117) (766)

Land revaluation excess (Note 16) 41,422 41,412 440,425

Foreign currency translation adjustments (11,384) (12,201) (121,042)

Total accumulated other comprehensive 32,781 30,132 348,548

Minority interests in consolidated subsidiaries 17,498 17,153 186,050

Total net assets 155,521 147,725 1,653,599Total liabilities and net assets ¥447,446 ¥437,840 $4,757,532

Yen U.S. dollars

(Note 1)

Net assets per share ¥155.35 ¥147.26 $1.65


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Consolidated Statements of Income TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES


Millions of yen Thousands of U.S. dollars

(Note 1)

2013 2012 2013

Net sales (Note 15) ¥339,009 ¥349,505 $3,604,561

Cost of sales 267,694 274,804 2,846,295

Gross profit 71,315 74,702 758,266

Selling, general and administrative expenses 54,234 56,396 576,651

Operating income (Note 15) 17,081 18,306 181,615

Other income (expenses)

Interest income 140 207 1,489

Dividend income 859 761 9,133

Interest expense (1,894) (2,064) (20,138)

Gain on sale of securities 2,426 146 25,795

Foreign exchange gains 952 - 10,122

Gain on sale of property, plant and equipment 247 217 2,626

Loss on disposal of property, plant and equipment (1,583) (1,509) (16,831)

Impairment loss (Note 7, 15 and 17) (1,668) - (17,735)

Equity in income of unconsolidated subsidiaries and affiliates 657 608 6,986

Retirement benefits for employees for prior periods 1,570 (1,570) 16,693

Losses on lawsuits (1,335) (2,237) (14,195)

Amortization of negative goodwill 946 1,006 10,058

Provision for environmental measures - (894) -

Other, net (5,624) (2,113) (59,798)

(4,307) (7,442) (45,795)

Income before income taxes and minority interests 12,774 10,864 135,820

Provision for income taxes (Note 8)

Current 2,387 1,621 25,380

Deferred 2,011 3,521 21,382

4,398 5,142 46,762

Income before minority interests 8,376 5,722 89,058

Minority interests in income of consolidated subsidiaries (737) (1,134) (7,836)

Net income ¥7,639 ¥4,588 $81,223

Yen U.S. dollars (Note 1)

Net income per share

Basic (Note 2) ¥8.61 ¥5.17 $0.092

Cash dividends applicable to the year ¥3.50 ¥3.50 $0.037


14

Consolidated Statements of Comprehensive Income TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES



2013 2012 2013

Income before minority interests ¥8,377 ¥5,721 $89,070

Other comprehensive income Valuation difference on available-for-sale securities 1,719 714 18,278

Deferred gains and losses on hedges 45 42 478

Land revaluation excess - 3,428 - Foreign currency translation adjustments 852 (829) 9,059 Share of other comprehensive income of associates accounted for using

equity method 105 (11) 1,116

Total other comprehensive income (Note 19) 2,721 3,344 28,931

Comprehensive income 11,098 9,065 118,001

Comprehensive income attributable to

Owners of the parent 10,279 7,909 109,293

Minority interests ¥819 ¥1,156 $8,708

15

Consolidated Statements of Changes In Net Assets TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES



2013 2012 2013

Shareholders' equity Capital stock Balance at the beginning of current period ¥51,730 ¥51,730 $550,027 Changes in items during the period Total changes in items during the period - - -

Balance at the end of current period 51,730 51,730 550,027

Capital surplus Balance at the beginning of current period 32,227 32,227 342,658 Changes in items during the period Disposal of treasury stock 12 (0) 128

Total changes in items during the period 12 (0) 128


Retained earnings Balance at the beginning of current period 17,042 15,481 181,201 Changes in items during the period Dividends from surplus (3,110) (3,110) (33,068) Net income 7,639 4,587 81,223 Reversal of land revaluation excess (10) 84 (106)

Increase due to increase in consolidated subsidiaries 7 - 74 Decrease due to decrease in consolidated subsidiaries - (0) -

Total changes in items during the period 4,526 1,561 48,123


Treasury stock Balance at the beginning of current period (559) (562) (5,944) Changes in items during the period Purchase of treasury stock (3) (2) (32) Disposal of treasury stock 267 5 2,839

Total changes in items during the period 264 3 2,807

Balance at the end of current period (295) (559) (3,137)

Total shareholders' equity Balance at the beginning of current period 100,440 98,876 1,067,943 Changes in items during the period Dividends from surplus (3,110) (3,110) (33,068) Net income 7,639 4,587 81,223 Reversal of land revaluation excess (10) 84 (106)

Increase due to increase in consolidated subsidiaries 7 - 74 Decrease due to decrease in consolidated subsidiaries - (0) - Purchase of treasury stock (3) (2) (32) Disposal of treasury stock 279 5 2,966


Balance at the end of current period 105,242 100,440 1,119,001


16



2013 2012 2013

Accumulated other comprehensive income Valuation difference on available-for-sale securities Balance at the beginning of current period ¥1,038 ¥305 $11,037 Changes in items during the period Net changes in items other than shareholders' equity 1,777 733 18,894

Total changes in items during the period 1,777 733 18,894


Deferred gains and losses on hedges Balance at the beginning of current period (117) (159) (1.244) Changes in items during the period Net changes in items other than shareholders' equity 45 42 478

Total changes in items during the period 45 42 478

Balance at the end of current period (72) (117) (766)

Land revaluation excess Balance at the beginning of current period 41,412 38,132 440,319 Changes in items during the period Net changes in items other than shareholders' equity 10 3,280 106

Total changes in items during the period 10 3,280 106


Foreign currency translation adjustments Balance at the beginning of current period (12,201) (11,384) (129,729) Changes in items during the period Net changes in items other than shareholders' equity 818 (817) 8,698

Total changes in items during the period 818 (817) 8,698

Balance at the end of current period (11,383) (12,201) (121,031)

Total accumulated other comprehensive income Balance at the beginning of current period 30,132 26,894 320,383 Changes in items during the period Net changes in items other than shareholders' equity 2,650 3,238 28,177



Minority interests Balance at the beginning of current period 17,153 24,003 182,382 Changes in items during the period Net changes in items other than shareholders' equity 346 (6,851) 3,679

Total changes in items during the period 346 (6,851) 3,679


Total net assets Balance at the beginning of current period 147,724 149,773 1,570,696 Changes in items during the period Dividends from surplus (3,110) (3,110) (33,068) Net income 7,639 4,587 81,223 Reversal of land revaluation excess (10) 84 (106)

Increase due to increase in consolidated subsidiaries 7 - 74 Decrease due to decrease in consolidated subsidiaries - (0) - Purchase of treasury stock (3) (2) (32) Disposal of treasury stock 280 4 2,977 Net changes in items other than shareholders' equity 2,995 (3,613) 31,845

Total changes in items during the period 7,798 (2,050) 82,913

Balance at the end of current period 155,522 147,724 1,653,609

17

Consolidated Statements of Cash Flows TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES



2013 2012 2013 Cash flows provided by operating activities Income before income taxes and minority interests ¥12,774 ¥10,863 $135,821 Depreciation and amortization 13,246 19,473 140,840 Amortization of negative goodwill (946) (1,006) (10,058) Allowance for doubtful receivables, net (187) (146) (1,988) Retirement benefits, net 819 1,412 8,708 Interest and dividend income (999) (968) (10,622) Interest expense 1,894 2,064 20,138 Equity in losses of unconsolidated subsidiaries and affiliates (657) (608) (6,986) Impairment loss 1,668 - 17,735 Loss on sale and disposal of property, plant and equipment, net 1,432 1,325 15,226 Write-down and gain on sale of securities (2,200) (88) (23,392) Losses related to lawsuits 1,335 2,237 14,195 Increase in trade notes and accounts receivable 1,710 (2,756) 18,182 Decrease (increase) in inventories 6,203 (11,787) 65,954 Increase in trade notes and accounts payable (272) (1,861) (2,892) Decrease (increase) in prepaid pension costs (311) 145 (3,307) Other, net (2,561) (156) (27,230) Total 32,948 18,143 350,324

Payments related to lawsuits (1,430) (2,685) (15,205) Income taxes paid (1,163) (1,265) (12,366) Other, net - - - Net cash flows provided by operating activities 30,355 14,193 322,753 Cash flows used in investing activities: Purchase of property, plant and equipment and intangibles (16,475) (16,659) (175,173) Proceeds from disposal of property, plant and equipment and intangibles 622 613 6,614 Purchase of investment securities (33) (46) (351) Proceeds from sale of investment securities 3,903 323 41,499 Purchase of investments in subsidiaries (1,730) (71) (18,394) Proceeds from sales of investments subsidiaries 1,630 - 17,331 Interest and dividend income excluding income from unconsolidated subsidiaries and affiliates 963 976 10,239

Dividend income from equity method affiliates 60 173 638 Other, net (234) (371) (2,488) Net cash flows used in investing activities (11,294) (15,062) (120,085)Cash flows used in financing activities: Cash dividends (3,096) (3,094) (32,919) Cash dividends to minority interests (600) (735) (6,380) Decrease (increase) in short-term bank loans (637) 1,575 (6,773) Proceeds from long-term debt 20,285 30,100 215,683 Repayment of long-term debt (29,280) (27,285) (311,324) Payment for retirement by preferred securities - (7,242) -Proceeds from issuance of bonds 15,000 - 159,490 Payment of interest (1,897) (2,160) (20,170) Payment for purchase of treasury stock (3) (2) (32) Proceeds from sale of treasury stock 287 4 3,052 Repayments of finance lease obligations (2,694) (2,468) (28,644) Other, net - (224) - Net cash flows used in financing activities: (2,635) (11,531) (28,017)Adjustments for foreign currency translation 226 (195) 2,404Net increase (decrease) in cash and cash equivalents 16,652 (12,595) 177,055Cash and cash equivalents at beginning of year 9,481 21,927 100,808 Increase resulting from changes in consolidated subsidiaries 334 149 3,551 Cash and cash equivalents at end of year (Note 18) ¥26,467 ¥9,481 $281,414


18

Notes to Consolidated Financial Statements TOYOBO CO., LTD. AND CONSOLIDATED SUBSIDIARIES

1. BASIS OF PRESENTING FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Toyobo Co., Ltd. (the "Company") and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.

Prior to the year ended March 31, 2009, the accounts of consolidated overseas subsidiaries were based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. The accounts of major consolidated overseas subsidiaries for the year ended March 31, 2012 and 2013 were prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles for consolidation purposes, with adjustments for the specified five items as applicable in compliance with ASBJ Practical Solution No. 18, “Tentative Treatment of Accounting for Foreign Subsidiaries in Preparing Consolidated Financial Statements.” If other GAAP are used in preparing other foreign subsidiaries financial statements for consolidation purposes, appropriate modifications are also made. The accompanying consolidated financial statements have been restructured and translated into English, with some expanded descriptions, from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplementary information included in the corporate Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements. Certain reclassifications have been made in the previous consolidated financial statements to conform to the current presentation.

Translations of the Japanese yen amounts into U.S. dollar amounts were included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2013, which was ¥94.05 to U.S. $1.00. These translations should not be construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into U.S. dollars at this or any other rate of exchange.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its 53 significant, substantially controlled subsidiaries.

Investments in 10 affiliates over which the Company has significant influence are accounted for using the equity method. Intercompany

transactions and accounts have been eliminated upon consolidation. Any significant difference between the cost of an investment in a consolidated

subsidiary and the equity in the net assets at the date of acquisition is amortized over five years. In the elimination of investments in subsidiaries,

the assets and liabilities of the subsidiaries, including the portion attributable to minority stockholders, are evaluated using the fair value at the time

the Company acquired control of the respective subsidiary.

For the year ended March 31, 2013, the accounts of 17 consolidated subsidiaries were included based on a fiscal year that ended on December 31,

1 on a fiscal year that ended January 31 and 1 on a fiscal year that ended March 20. Except for one such subsidiary, TC Preferred Capital Limited,

these subsidiaries did not prepare for consolidation purposes financial statements that corresponded with the fiscal year of the Company. Although

the fiscal year-end of TC Preferred Capital Limited is January 31, the subsidiary provided financial statements based on a provisional statement of

accounts as of March 31, 2013 to facilitate the preparation of the consolidated financial statements of the Company. For the other consolidated

subsidiaries with a fiscal year-end different from that of the Company, if significant transactions occurred between their fiscal year-end and that of

the Company, necessary adjustments were made to reflect the transactions in the consolidated financial statements.

Securities

Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains and losses on these securities are

reported, net of applicable income taxes, as a separate component of net assets. Realized gains and losses on the sale of such securities are

computed using moving average cost. Other securities with no available fair market value are stated at moving average cost.

Inventories

Inventories are principally stated at the lower of weighted average cost or net realizable value at the fiscal year-end.

19

Property, plant and equipment

The Company and its consolidated subsidiaries use the straight-line method for the depreciation of property, plant and equipment.

(Changes in accounting methods)

Effective from the year ended March 31, 2013, the Company and its domestic consolidated subsidiaries changed the method of calculating

depreciation of tangible fixed assets from the previous declining balance method to the straight-line method. The Company has concluded the

structural reforms of its textile and other businesses, and, at present, is proceeding with aggressive capital investments in Japan and overseas for

expanding its specialty businesses. In view of this change in strategic focus, the Company conducted a review of its depreciation methods.

In view of the outlook for securing stable earnings for the long term from the Toyobo Group’s product portfolio and the outlook for incurring

equipment maintenance costs on average, the Company made the judgment that changing to the straight-line method of calculating depreciation

would result in a more accurate allocation of its expenses. Accompanying this change in accounting methods, depreciation on a consolidated basis

was ¥3,995 million ($42,477 thousand) lower for the fiscal year ended March 31, 2013 than it would have been without this change. As a result,

gross profit was ¥2,592 million ($27,560 thousand) higher, operating income was ¥3,256 million ($34,620 thousand) higher, and ordinary income as

well as income before income taxes and minority interests was ¥3,352 million ($35,641 thousand) higher than they would been in the absence of this

accounting change. For information on the effects of this change on the Company’s operating segments, refer to the “Segment Information” section

of this report.

Lease assets

Lease assets under finance lease transactions that transfer ownership of the lease assets are amortized based on the same depreciation method

as is applied to tangible fixed assets.

Lease assets under finance lease transactions that do not transfer ownership of the lease assets are amortized using the straight-line method over

the lease term, assuming that the useful life coincides with the lease term and the residual value is zero. Finance lease transactions that do not

transfer ownership are accounted for as operating leases if the inception of the lease was on or before March 31, 2008

Intangible assets

Other intangible assets, including software, are amortized using the straight-line method over the estimated useful life of five years.

Bond issuance costs

Bond issuance costs are recorded at total cost when expended.

Research and development expenses

Expenses related to research and development are charged to income as incurred. Research and development expenses were ¥9,966 million

($105,965 thousand) and ¥10,819 million for the years ended March 31, 2013 and 2012, respectively.

Allowance for doubtful receivables

With respect to normal trade accounts receivable, an allowance for doubtful receivables is stated based on the actual rate of historical bad debts.

For certain other doubtful receivables, the uncollectible amount is individually estimated.

Accrued employees’ bonuses

The Company and its domestic consolidated subsidiaries follow the Japanese practice of paying bonuses to employees in June and December.

The Company and its domestic subsidiaries accrue the estimated amounts of employees’ bonuses at the balance sheet date based on estimated

amounts to be paid in the subsequent period.

Employees’ severance and retirement benefits

Under the terms of the Company’s and its domestic consolidated subsidiaries’ retirement plans, substantially all employees are entitled to lump-sum

payments at the time of retirement. The amount of the retirement benefit is, in general, based on the length of service, basic salary at the time of

retirement and reason for retirement. The Company and its domestic consolidated subsidiaries also have contributory funded pension plans which

cover substantially all employees. The Company and its domestic consolidated subsidiaries provide for employees’ severance and retirement

benefits based on the estimated amounts of projected benefit obligation and the fair value of plan assets.

20

Retirement benefits for directors, operating officers and corporate auditors

Some consolidated subsidiaries accrue estimated amounts of retirement benefits for directors, operating officers and corporate auditors equal to

management’s estimate of the amounts that would be payable at the balance sheet date if they retired at that date. Amounts payable to directors

and corporate auditors upon retirement are subject to the approval of the stockholders of the subsidiaries.

Provision for environmental measures

In order to prepare for expenditures related to environmental measures, such as the removal of hazardous substances required by laws and

regulations, the Company and some consolidated subsidiaries reserve the amount expected to be incurred in future periods.

Translation of foreign currencies

Accounts denominated in foreign currencies, namely cash, receivables and payables are translated at year-end exchange rates. The assets and

liabilities in the financial statements of the foreign consolidated subsidiaries are translated into Japanese yen at year-end exchange rates. Income

and expenses are translated at the average exchange rate prevailing during the year. Resulting translation adjustments are reflected in the

consolidated financial statements as “Foreign currency translation adjustments” and in minority interests.

Derivatives and hedge accounting

Derivative financial instruments are stated at fair value, and changes in the fair value are recognized as gain or loss unless the derivative financial

instrument is used for hedging purposes. If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and

its consolidated subsidiaries defer recognition of gain or loss resulting from a change in the fair value of the derivative financial instrument until the

related loss or gain on the hedged item is recognized. However, when forward foreign exchange contracts are used as hedges and meet certain

hedging criteria, the foreign exchange forward contracts and hedged items are accounted for in the following manner:

1. If a foreign exchange forward contract is executed to hedge an existing foreign currency receivable or payable,

(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payable (translated using the spot rate at the inception date of the contract) and the book value of the receivable or payable is recognized in the statement of income in the period which includes the inception date, and

(b) the discount or premium on the contract (the difference between the Japanese yen amount of the contract translated using the contracted forward rate and that translated using the spot rate at the inception date of the contract) is recognized over the term of the contract.

2. If a foreign exchange forward contract is executed to hedge a future transaction denominated in a foreign currency, the future transaction will be

recorded using the contracted forward rate, and no gain or loss on the forward foreign exchange contract will be recognized.

Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under the interest

rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

The following lists the hedging derivative financial instruments used by the Company and its consolidated subsidiaries and the corresponding items

hedged:

Hedging instruments: Hedged items:

Foreign exchange forward contracts Future transactions denominated in foreign currencies

Foreign currency receivables and payables

Interest rate swap contracts Interest expense on borrowings

The Company and certain consolidated subsidiaries evaluate hedge effectiveness semiannually by comparing the cumulative changes in cash

flows or the changes in fair value of the hedged items and the corresponding changes in the hedging derivative instruments.

Amortization of goodwill

Goodwill is amortized using the straight-line method over five years.

Impairment of fixed assets

In accordance with the “Accounting Standards for Impairment of Fixed Assets ” issued by the Business Accounting Council in Japan, fixed assets

are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability is measured by comparing the carrying amount of an asset or group of assets to the estimated undiscounted future cash flows

21

expected to be generated by the asset or group of assets. If the carrying amount exceeds the estimated future cash flows, an impairment charge is

recognized for the amount by which the carrying amount exceeds the greater of net realizable value or value in use.

Income taxes

The Company and its consolidated subsidiaries provide for income taxes at the amounts currently payable and for deferred income taxes pertaining

to loss carryforwards, temporary differences between financial and tax reporting and temporary differences in respect to the elimination of

unrealized intercompany profits and other adjustments for consolidation purposes. The asset and liability method is used to recognize deferred tax

assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for

financial reporting purposes and the amounts used for income tax purposes.

Net income per share

Computations of net income per share of common stock are based on the weighted average number of shares outstanding during each period.

Diluted net income per share is not disclosed because the Company had no dilutive shares outstanding.

Reconciliation of the differences between basic and diluted net income per share for the year ended March 31, 2013 and 2012 was as follows.

Millions of yen Thousands of shares Yen U.S. dollars

Net income Weighted average number

of shares Net income per share

For the year ended March 31, 2013:

Basic

Net income available to common stockholders ¥7,639 886,957 ¥8.61 $0.092

Millions of yen Thousands of shares Yen

Net income Weighted average number

of shares Net income per share


Basic

Net income available to common stockholders ¥4,587 886,658 ¥5.17

New standards not yet applied

Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, revised on May 17, 2012) and the Guidance on Account Standard for

Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) have been issued, but the Company has not yet applied such standards and related

guidance as of March 31, 2013. Summaries of the standards are as follows.

1. Overview

Under the amended rule, actuarial gains and losses, gains and losses due to changes in accounting methods and past service costs that are yet

to be recognized in profit or loss are to be recognized within the net asset section, after adjusting for tax effects, and the deficit or surplus are to be

recognized as a liability or asset without any adjustments. For determining the method of attributing expected benefit to periods, the standard now

allows to a choice of benefit formula basis of straight-line basis. The method for determination of the discount rate has also been amended.

2. Date of application

The Company will adopt this accounting standard and guidance without the revision about the calculation method of pension benefit obligation

and service costs from the end of the consolidated fiscal year ending on or after March 31, 2014. The Company will adopt the revision about the

calculation method for pension benefit obligation and service costs from the beginning of the consolidated fiscal year commencing April 1, 2014.

3. Impact of the application of this accounting standard

At the time the consolidated financial statements were prepared, the Company was still assessing the impact of the adoption of this standard and

related guidance.

22

3. FINANCIAL INSTRUMENTS

1. Overall status of financial instruments

(1) Policy for the use of financial instruments

In the Toyobo Group, cash is managed only in the form of short-term instruments after ensuring the collectibility of the principal and

sufficient liquidity. Funds are raised through both direct access to capital markets such as through the issuance of bonds and through

indirect financing in the form of borrowings from banks. As a policy, the Company uses derivative financial instruments only for the purpose

of hedging exchange rate and interest rate fluctuation risk in the normal course of the Company’s business and does not engage in highly

leveraged transactions or speculative transactions using these instruments.

(2) Type and risk of financial instruments and related risk management system

Notes and accounts receivable－trade arising in the normal course of the Company’s business are exposed to the credit risk of customers. Such risk is managed through the monitoring of

due dates and balances by customer and by examining the credit standing of major customers in each fiscal period in accordance with the credit management rules of the Company.

Most notes and accounts payable－trade arising in the normal course of the Company’s business are due in less than one year.

Trade receivables and payables denominated in foreign currencies are exposed to exchange rate fluctuation risk. In principle, they are hedged for the net position risk remaining after cross

currency netting by using derivative instruments such as foreign exchange forward contracts.

Investment securities consist mainly of stocks of our customers and suppliers held in connection with our ongoing business relationships and are exposed to the risk of market price

fluctuations. We regularly monitor the current market price of these stocks and the financial conditions of the issuers, i.e., our customers and suppliers, and review the status of our stock

holdings on an ongoing basis, taking into consideration our relationship with these customers and suppliers.

Short-term borrowing is used mainly to finance operating transactions. Long-term debt and corporate bonds are used mainly to finance capital improvements, other investments and

lending. For debt exposed to the risk of interest rate fluctuations, derivatives (mainly interest rate swaps) are used as hedging instruments on an individual contract basis to avoid the risk of

changes in interest payments. The hedging instruments, hedged items, hedging policy and the method used to assess hedge effectiveness in relation to hedge accounting are described

in the Note 2, “Significant Accounting Policies.”

In accordance with the internal rules of the Toyobo Group, derivative transactions are executed and managed under a system that segregates functions and promotes mutual checking,

including (1) the establishment of risk management policies by the director in charge of finance, (2) the execution of transactions and management of positions by the Finance Department

and (3) the valuation of and accounting for financial instruments by the Accounting and Control Department. Overall derivative positions across the Toyobo Group are managed by the

Finance Department and reported to the director in charge of finance. The Company and its consolidated subsidiaries deal with highly rated financial institutions as counterparties to these

transactions and no counterparty default is expected.

Trade payables and interest bearing debts such as borrowings create exposure to liquidity risk. The liquidity risk arising from these liabilities is managed at the individual company level

based on cash flow projections prepared by each group company. In addition, the liquidity risk of the domestic subsidiaries is managed centrally by the Group’s finance subsidiary using a

cash management system.

(3) Supplementary explanation on disclosure about fair value of financial instruments

In addition to the fair values determined by market price, the fair value of financial instruments includes a reasonably determined value if no market price is available. Certain assumptions

used for such determinations are subject to change. Accordingly, the results of such valuations could change if different assumptions were used. Furthermore, the contractual and other

amounts of derivative transactions included in Note 5, “Derivatives and hedge accounting,” do not reflect the market risk associated with these derivative transactions themselves.

2. Disclosure about fair value, etc. of financial instruments

The following table summarizes the carrying amounts and the estimated fair values of financial instruments as of March 31, 2013 and 2012. Note that the following table does not include unlisted

equity securities and certain other securities whose fair value is extremely difficult to estimate.


Book value Fair value Book value Fair value

23


Cash and cash equivalents ¥26,600 ¥26,600 $282,828 $282,828Notes and accounts receivable －trade 74,598 74,598 793,174 793,174

Investment securities

Held-to-maturity investments 31 33 330 351

Available-for-sale-securities 16,124 16,124 171,441 171,441

Total assets ¥117,353 ¥117,355 $1,247,773 $1,247,794

Notes and accounts payable－trade ¥48,452 ¥48,452 $515,173 $515,173

Short-term borrowing 51,211 51,211 544,508 544,508

Long-term debt

Corporate bonds 30,000 30,255 318,979 321,691

Long-term loans 74,094 74,624 787,815 793,450

Total liabilities ¥203,757 ¥204,542 $2,166,475 $2,174,822

Derivatives (*) (¥213) (¥213) ($2,265) ($2,265)

(*) Derivative assets and liabilities are presented on a net basis, and an amount enclosed in parentheses ( ) indicates a net liability position.

Millions of yen

Book value Fair value


Cash and cash equivalents ¥9,608 ¥9,608Notes and accounts receivable －trade 75,542 75,542

Investment securities

Held-to-maturity investment 37 40

Available-for-sale-securities 15,297 15,297

Total assets ¥100,484 ¥100,487

Notes and accounts payable－trade ¥47,741 ¥47,741

Short-term borrowing 51,432 51,432

Long-term debt

Corporate bonds 15,000 15,401

Long-term loans 82,965 83,495

Total liabilities ¥197,138 ¥198,069

Derivatives (*) (¥251) (¥251)

(*) Derivative assets and liabilities are presented on a net basis, and an amount enclosed in parentheses ( ) indicates a net liability position.

(Note 1) Methods used to determine the fair value of financial instruments and matters concerning marketable securities and derivatives

Assets

(1) Cash and cash equivalents and (2) Notes and accounts receivable－trade

As these items are settled within a short-term period, their fair value is nearly equal to the carrying amount. Therefore, for these items,

the carrying amount is reported as the fair value.

(3) Investment securities

The fair value of held-to-maturity securities is calculated as the present value of expected receipts from redemption discounted at an

interest rate applicable to safe investments. The fair value of available-for-sale securities is determined based on the price quoted on

the exchange (for stocks) or the published net asset value per unit (for investment trusts). For investments in investment partnerships

that are deemed to be securities, the proportional equity share in the value of the partnership assets is reported as the fair value. See

Note 4, ”Securities,” section for notes on securities categorized by the purpose for which they are held.

Liabilities

24

(1) Notes and accounts receivable - trade and (2) Short-term borrowing

As these items are settled within a short-term period, their fair value is nearly equal to the carrying amount. Therefore, for these items,

the carrying amount is reported as the fair value.

(3) Corporate bonds

The fair value of corporate bonds is based on the market price.

(4) Long-term loans

The fair value of long-term loans is determined by discounting the sum of the principal and interest payments at an interest rate that is

estimated to be applicable to newly arranged debts of similar quality. For variable-rate long-term loans, the carrying amount is

reported as fair value as it is considered to be a reasonable approximation of fair value because such loans reflect the market interest

rates in a short-term period and there has been no significant change in the creditworthiness of the Company. However, the fair value

of certain variable-rate long-term loans that qualify for the special treatment of interest rate swaps is determined by discounting the

sum of the principal and interest payments net of any cash flows from the interest rate swap at an interest rate that is reasonably

estimated to be applicable to similar fixed rate debt.

Derivative transactions

Refer to the Note 5, “Derivatives and hedge accounting.”

(Note 2) Financial instruments whose fair value is extremely difficult to estimate

Millions of yen Thousands of

U.S.dollars

2013 2012 2013

Non-listed equity securities ¥1,155 ¥1,166 $12,281

For the financial instruments shown in the above table, quoted market price was not available. Therefore, the fair value was

considered to be extremely difficult to estimate and was not included in “Investment securities” in the above table summarizing the

carrying amounts and estimated fair values of financial instruments.

(Note 3) Stocks of subsidiaries and affiliates are also not included in “Investment securities” in the above table summarizing the carrying amounts and estimated fair values of financial instruments.

For stocks of listed subsidiaries and affiliates, the carrying amount was ¥4,135 million ($43,966 thousand) and ¥3,940 million for the years ended March 31, 2013 and 2012,

respectively, and the fair value was ¥2,114 million ($22,477 thousand) and ¥1,713 million for the years ended March 31, 2013 and 2012, respectively, with the difference being a

negative ¥2,021 million ($21,489 thousand) and ¥2,227 million for the years ended March 31, 2013 and 2012, respectively. The carrying amount of stocks of unlisted subsidiaries and

affiliates was stated at ¥5,497 million ($58,448 thousand) and ¥3,324 million for the years ended March 31, 2013 and 2012, respectively.

4. SECURITIES

The following tables summarize book values and fair values of held-to-maturity investments with available fair values as of March 31, 2013 and

2012:

Held-to-maturity investments

Millions of yen

25

2013 2012

Book value Fair value Difference Book value Fair value Difference

Held-to-maturity investments with fair value exceeding book value: Government bonds - - - - - -Corporate bonds ¥31 ¥33 ¥2 ¥38 ¥40 ¥2Other - - - - - -

Total ¥31 ¥33 ¥2 ¥38 ¥40 ¥2

Held-to-maturity investments with fair value not exceeding book value: Government bonds - - - - - -Corporate bonds - - - - - -Other - - - - - -

Total - - - - - -

Thousands of U.S. dollars 2013

Book value Fair value Difference

Held-to-maturity investments with fair value exceeding book value:

Government bonds - - -Corporate bonds $330 $351 $21 Other - - -

Total $330 $351 $21

Held-to-maturity investments with fair value not exceeding book value:

Government bonds - - -Corporate bonds - - -Other - - -

Total - - -

The following tables summarize acquisition cost and book value (fair value) of securities with available fair values as of March 31, 2013 and 2012:

Available-for-sale securities

Millions of yen

2013 2012

Acquisition cost

Book value Difference Acquisition cost

Book value Difference

26

Securities with book value exceeding acquisition cost:

Equity securities ¥9,162 ¥14,340 ¥5,178 ¥4,654 ¥7,932 ¥3,278

Bonds - - - - - -

Other 7 7 1 - - -¥9,169 ¥14,347 ¥5,179 ¥4,654 ¥7,932 ¥3,278

Securities with book value not exceeding acquisition cost:

Equity securities ¥2,365 ¥1,757 (¥608) ¥8,591 ¥7,339 (¥1,252)

Other 19 19 0 28 27 (1)

Total ¥2,384 ¥1,776 (¥608) ¥8,619 ¥7,366 (¥1,253)

Thousands of U.S. dollars

2013

Acquisition cost

Book value Difference

Securities with book value exceeding acquisition cost:

Equity securities $97,416 $152,472 $55,056

Bonds - - -

Other 74 74 11

$97,490 $152,546 $55,066

Securities with book value not exceeding acquisition cost:

Equity securities $25,146 $18,682 ($6,465)

Other 202 202 -

Total $25,348 $18,884 ($6,465)

The following table summarizes sales of available-for-sale securities and the related gains and losses for the years ended March 31, 2013 and

2012:


2013 2012 2013 Total sales of available-for-sale securities ¥3,840 ¥379 $40,829Related gains 2,233 197 23,743Related losses ¥9 ¥0 $96

Amount of write-down of investment securities was ¥216 million ($2,297 thousand) and ¥58 million, for the years ended March 31, 2013 and 2012,

respectively

5. DERIVATIVES AND HEDGE ACCOUNTING

The Company and some of its consolidated subsidiaries use derivatives to manage risks related to foreign currencies and interest rates. Details of

these derivatives are as follows.

Currency related transactions not designated as hedging transactions at March 31, 2013 and 2012 consisted of the following:

Millions of yen

27

2013 2012

Contract amount

Fair value Revaluation gain (loss)

Contract amount


Over the counter

Forward Sold ¥2,352 (¥97) (¥97) ¥1,575 (¥66) (¥66)

Bought 11 (0) (0) 47 3 3

Total ¥2,363 (¥97) (¥97) ¥1,622 (¥63) (¥63)


2013

Contract amount


Over the counter

Forward

Sold $25,008 ($1,031) ($1,031)

Bought 117 (0) (0)

Total $25,125 ($1,031) ($1,031)

Note: The fair values of the transactions are provided by financial institutions.

Currency related transactions designated as hedging transactions at March 31, 2013 and 2012 consisted of the following:

Millions of yen

2013 2012 Contract amount Contract amount

Major hedged items Total Maturity over 1 year

Fair valueTotal Maturity

over 1 yearFair value

Deferral hedge accounting (Note 1) Forward

Sold Accounts receivable - trade ¥98 - (¥1) ¥204 - (¥7)

Bought Accounts payable - trade 452 - 9 510 - 5

Options

Bought Accounts payable - trade - - - - - -

Alternative method (Note 2) Forward

Sold Accounts receivable - trade 250 - (Note 3) 604 - (Note 3)

Bought Accounts payable - trade 26 - (Note 3) 85 - (Note 3)

Total ¥826 - ¥8 ¥1,403 ¥0 (¥2)


2013 Contract amount


Fair value

Deferral hedge accounting (Note 1)

Forward

28

Sold Accounts receivable - trade $1,042 - ($11)

Bought Accounts payable - trade 4,806 - 96

Options

Bought Accounts payable - trade - - -

Alternative method (Note 2)

Forward

Sold Accounts receivable - trade 2,658 - (Note 3)

Bought Accounts Payable - trade 276 - (Note 3)

Total $8,782 - $85

Note: 1. The fair value of the transactions are determined by the forward exchange rate.

2. Foreign monetary obligations denominated in foreign currencies for which foreign exchange forward contracts are used to hedge the

foreign currency fluctuation are translated at the contracted rate if the forward contracts qualify for hedge accounting.

3. For certain accounts receivable - trade and accounts payable - trade denominated in foreign currencies for which foreign exchange

forward contracts are used to hedge foreign currency fluctuations, the fair value of the derivative financial instrument is included in fair

value of the account receivable - trade or account payable - trade as a hedged item.

Interest rate related transactions designated as hedging transactions at March 31, 2013 and 2012 consisted of the following:

Millions of yen



Fair value

Deferral hedge accounting of interest rate swaps (Note 1)Short-term borrowing and long-term debt

Receive - float / pay – fixed ¥12,000 ¥9,000 (¥125)

Special treatment of interest rate swaps

long-term debt

Receive - float / pay – fixed 8,051 5,980 (Note 2)

Total ¥20,051 ¥14,980 (¥125)

Millions of yen



Fair value

Deferral hedge accounting of interest rate swaps (Note 1)Short-term borrowing and long-term debt

Receive - float / pay - fixed ¥13,000 ¥12,000 (¥186)

Special treatment of interest rate swaps long-term debt

Receive - float / pay - fixed 14,857 9,677 (Note 2)

Total ¥27,857 ¥21,677 (¥186)




Fair value

Deferral hedge accounting of interest rate swaps (Note 1)

29

Short-term borrowing and long-term debt

Receive - float / pay - fixed $127,592 $95,694 ($1,329)

Special treatment of interest rate swaps

long-term debt

Receive - float / pay - fixed 85,603 63,583 (Note 2)

Total $213,195 $159,277 ($1,329)

Note: 1. The fair value of the transactions is provided mainly by financial institutions.

2. As interest rate swaps subject to the special treatment of interest rate swaps are accounted for as a single item with the underlying

long-term debt, which are the hedged items, their fair value is included in the long-term debt.

6. INVENTORIES

Inventories at March 31, 2013 and 2012 consisted of the following:


2013 2012 2013

Finished goods ¥43,073 ¥47,963 $457,979Work-in-process 14,179 14,830 150,759Raw materials 8,909 10,234 94,731Supplies 4,847 4,545 51,541

¥71,008 ¥77,572 $755,010

7. LOSS ON IMPAIRMENT

The Company and its domestic consolidated subsidiaries recorded impairment loss on the following asset groups for the year ended March 31,

2013.

For the year ended March 31, 2013

Location Usage Type

Toyobo Co., Ltd. (Tsuruga, Fukui)

Business assets (tire code production plant)

Building and structures Machinery and equipment Tools, furniture and fixtures Intangible assets

Toyobo Real Estate Co., Ltd. (Tsuruga, Fukui)

Idle assets Land

The Toyobo Group’s business assets are grouped according to classifications in administrative accounting and idle assets are accounted for on

an individual basis.

Since the business assets shown above have reported losses for more than the past two years and the land price of the idle assets declined, the

book value of these assets has been marked down to their recoverable value. This write-down was treated as an impairment loss amounting to

¥1,668 million ($17,735 thousand) and included among other expenses. The breakdown of this expense was as follows:


Buildings and structure ¥352 $3,743

Machinery and equipment 1,301 13,833

Land 4 43

Tangible assets and other 8 85

30

Intangible assets and other 3 32

The recoverable value of the land was measured by making reasonable adjustment to the values assessed for fixed assets tax purposes and

other values. For the other assets, the recoverable value was measured at the net sales value based on reasonable estimations.

8. INCOME TAXES

Significant components of the Companies and consolidated subsidiaries deferred tax assets and liabilities as of March 31, 2013 and 2012 are set

forth below.


31

2013 2012 2013

Deferred tax assets:

Accrued employees’ bonuses ¥1,677 ¥1,685 $17,831

Devaluation loss on inventories 996 848 10,590

Employees' severance and retirement benefits 4,263 4,406 45,327

Allowance for doubtful receivables 71 240 755

Impairment loss 1,376 748 14,631

Write-down of investment securities 814 691 8,655

Tax losses carried forward 16,579 21,579 176,279

Unrealized income 8,197 8,178 87,156

Securities acquired through merger 236 236 2,509

Other 2,207 2,485 23,466

Subtotal deferred tax assets 36,416 41,096 387,199

Valuation allowance (7,059) (9,654) (75,056)

Total deferred tax assets 29,357 31,442 312,143

Deferred tax liabilities:

Reserve for deferred gain on sale of property (3,339) (3,350) (35,502)

Undistributed earnings of overseas subsidiaries and affiliates (361) (315) (3,838)

Consolidation adjustment for allowance for doubtful receivables (5) (8) (53)

Valuation difference of subsidiaries (1,710) (1,586) (18,182)

Tax deferred gains on assets transferred to a new company (1,589) (1,589) (16,895)

Tax deferred gains on spin-off (577) (577) (6,135)

Net unrealized holding gains on securities (1,570) (721) (16,693)

Total deferred tax liabilities (9,151) (8,146) (97,298)

Net deferred tax assets ¥20,206 ¥23,296 $214,845

2013 2012 2013

Current assets ¥6,291 ¥7,373 $66,890

Investments and noncurrent assets 16,636 18,828 176,885

Current liabilities (0) (8) (0)

Long-term liabilities (2,721) (2,897) (28,935)

Total ¥20,206 ¥23,296 $214,840

In addition to the above, deferred income taxes on land revaluation of ¥24,678 million ($262,392 thousand) and ¥24,673 million for the years ended

March 31, 2013 and 2012, respectively, were recognized in long-term liabilities.

The effective rate for the years ended March 31, 2013 and 2012 differ from statutory tax rate as follows:

2013 2012

Statutory tax rate 38.0% 41.0%

Expenses not deductible for tax purposes 1.1 1.1

32

Nontaxable dividend income (1.9) (0.7)

Tax losses carried forward (1.6) (8.4)

Valuation allowance 1.5 7.0

Equity in income of unconsolidated subsidiaries and affiliates (1.8) (2.2)

Unrealized gain 2.0 2.4

Adjustment of deferred tax assets by change in tax rate 2.8 12.6

Retained earnings of entities such as overseas subsidiaries 0.4 0.2

Difference in tax rate (3.1) (4.2)

Goodwill 0.2 0.6

Negative goodwill (2.8) (4.2)

Other (0.4) 2.2

Effective tax rate 34.4% 47.4%

9. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings at March 31, 2013 and 2012 consisted of short-term notes generally due within one year bearing interest at an average rate

of 0.81% and 1.02%, respectively.

Long-term debt at March 31, 2013 and 2012 consisted of the following:


33

2013 2012 2013

Unsecured: 1.78% bonds due 2013 ¥10,000 ¥10,000 $106,326

2.06% bonds due 2015 5,000 5,000 53,163 0.48% bonds due 2015 5,000 - 53,163 0.69% bonds due 2017 10,000 - 106,326Long-term loans, principally maturing through 2020, at the weighted

average interest rate of 0.88% as of March 31, 2013 Secured 332 545 3,530 Unsecured 73,761 82,420 784,274Lease obligations maturing serially through 2019 4,125 5,491 43,860

Total 108,218 103,456 1,150,642Less amount due within one year 33,387 29,698 354,992

¥74,831 ¥73,758 $795,650

The aggregate annual maturities of long-term debt outstanding as of March 31, 2013 were as follows:

Year ending March 31 Millions of yen Thousands of

U.S. dollars

2014 ¥33,387 $354,992 2015 29,981 318,7772016 21,622 229,8992017 6,096 64,8172018 15,675 166,667Thereafter 1,457 15,492

¥108,218 $1,150,644

The Company has overdraft contracts and credit commitments from four banks in order to secure financing. The total unused credit available to the

Company at March 31, 2013 was ¥21,000 million ($223,285 thousand).

10. EMPLOYEES SEVERANCE AND RETIREMENT BENEFITS

Employees’ severance and retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2013 and 2012

consisted of the following:

Millions of yen Thousands of U. S. dollars

34

2013 2012 2013

Projected benefit obligation ¥60,064 ¥61,911 $638,639

Fair value of pension assets (33,815) (28,217) (359,543)

Employee retirement benefit trust (6,122) (5,811) (65,093)

Unrecognized net transition obligation (3,150) (4,721) (33,493)

Unrecognized actuarial differences (8,501) (14,575) (90,388)

Unrecognized prior service costs (Note 1) (612) (686) (6,507)

Employees severance and retirement benefits ¥7,864 ¥7,901 $83,615

Prepaid pension cost 9,712 9,401 103,264

Accrued retirement benefits ¥17,576 ¥17,302 $186,879

Note: 1. The amount for the fiscal year ended March 31, 2013 and 2012 was due to the integration in March 2011 of the corporation pension

plan and lump-sum retirement plan of the Company with those of the former Toyo Kasei Kogyo Co., Ltd., which was merged with the

Company in March 2010. 2. Some subsidiaries adopted a simplified method in calculating retirement benefit obligations.

Severance and retirement benefit expenses included in the consolidated statements of income for the years ended March 31, 2013 and 2012

comprised the following:

Millions of yen Thousands of U. S. dollars

2013 2012 2013

Service costs – benefits earned during the year (Note 2) ¥2,303 ¥2,182 $24,487

Interest cost on projected benefit obligation 1,140 1,148 12,121

Expected return on plan assets (1,157) (1,108) (12,302)

Amortization of net transition obligation 1,570 1,570 16,693

Amortization of actuarial differences 1,799 2,531 19,128

Amortization of prior service costs (Note 3) 76 76 808

Employees severance and retirement benefit expenses ¥5,731 ¥6,399 $60,935

Other (Note 4) 315 104 3,349

Total ¥6,046 ¥6,503 $64,284

Note: 1. In addition to the retirement benefit expenses stated above, premium severance pay amounting to ¥210 million ($2,233 thousand) in the

current fiscal year and ¥284 million in the previous fiscal year was paid.

2. The amount of employee contributions to the welfare pension fund is deducted.

3. The amount for the fiscal year ended March 31, 2013 and 2012 was due to the integration in March 2011 of the corporation pension plan

and lump-sum retirement plan of the Company with those of the former Toyo Kasei Kogyo Co., Ltd., which was merged with the

Company in March 2010.

4. Premium payment to the defined contribution system

5. Retirement benefit expenses of consolidated subsidiaries which adopted the simplified method are stated in "Service costs" and

“Amortization of net transition obligation."

The discount rate used by the Company and its domestic consolidated subsidiaries was mainly 2.0% for the years ended March 31, 2013 and 2012.

The rate of expected return on plan assets used by the Company and its domestic consolidated subsidiaries was mainly 3.5% for the years ended

March 31, 2013 and 2012. The estimated amount of all retirement benefits to be paid at future retirement dates is allocated equally to each service

year using the estimated total number of service years. Past service costs are recognized as an expense in equal amounts over ten years, and

actuarial gains and losses are recognized in the consolidated statements of income using the straight-line method over ten years.

11. ASSETS PLEDGED AS COLLATERAL

At March 31, 2013 and 2012, assets pledged as collateral for secured long-term debt of ¥332 million ($3,530 thousand) and ¥545 million,

respectively, customers’ deposits of ¥341 million ($3,626 thousand) and ¥383 million, respectively, and accounts payable of ¥33 million ($351

thousand) and ¥33 million, respectively, were as follows:


35

2013 2012 2013

Cash and cash equivalents ¥35 ¥35 $372

Property, plant and equipment ― net of accumulated depreciation 1,217 1,894 12,940

¥1,252 ¥1,929 $13,312

12. NET ASSETS

The consolidated financial statements have been reported in accordance with the provisions set forth in the Japanese Companies Act (the

“Companies Act”). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

(i) Dividends: The Companies Act allows Japanese companies to pay dividends at any time during the fiscal year in addition to the year-end dividend

upon resolution at the stockholders meeting. For Japanese companies that meet certain criteria such as having a board of directors,

independent auditors, a board of corporate auditors and one-year terms of service for directors rather than the two-year normal term

provided by the articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) if the company has

prescribed so in its articles of incorporation. The Companies Act permits Japanese companies to distribute dividends-in-kind (non-cash

assets) to stockholders subject to certain limitations and additional requirements. The Companies Act provides certain limitations on the

amounts available for dividends and the purchase of treasury stock. The maximum amount that the Company can distribute as dividends is

determined based on the nonconsolidated financial statements of the Company in accordance with the Companies Act and regulations.

(ii) Increases/decreases in and transfers of common stock, reserve and surplus: The Companies Act requires that an amount equal to 10% of

dividends must be appropriated as a legal reserve (of retained earnings) or as additional paid-in capital (of capital surplus), depending on

the equity account charged upon the payment of such dividends, until the total aggregate amount of legal reserve and additional paid-in

capital equals 25% of the common stock. Under the Companies Act, all additional paid-in capital and all legal earnings reserve may be

transferred to other capital surplus and retained earnings, respectively, and are potentially available for dividends. The Companies Act also

provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among

the accounts under certain conditions upon resolution of the stockholders.

(iii) Treasury stock: The Companies Act provides for Japanese companies to repurchase or dispose of treasury stock. The amount of treasury stock

purchased, however, cannot exceed the amount available for distribution to the stockholders, an amount which is determined by a specific

formula.

13. CONTINGENT LIABILITIES

At March 31, 2013 and 2012, the Company and certain consolidated subsidiaries were contingently liable for the following:


2013 2012 2013

As endorser of notes discounted ¥31 ¥406 $330

As guarantor of indebtedness

Unconsolidated subsidiaries and affiliates 3,674 4,400 39,064

Employees (housing loans) 101 140 1,074

¥3,775 ¥4,540 $40,138

14. LEASES

Lease payments for finance leases which do not transfer ownership of the lease assets and do not have bargain purchase provisions were ¥164

million ($1,744 thousand) and ¥236 million for the years ended March 31, 2013 and 2012, respectively. Future minimum lease payments for the

remaining lease periods as of March 31, 2013 and 2012, including interest, were ¥79 million ($840 thousand) and ¥140 million, respectively, for

payments due within one year and ¥298 million ($3,169 thousand) and ¥380 million, respectively, for payments due beyond one year.

Original lease obligations, accumulated payments and remaining payments on leased properties as of March 31, 2013 and March 31, 2012 were as

36

follows:

Thousands of Millions of yen U. S. dollars

2013 2012 2013

Machinery and equipment:

Original lease obligations ¥589 ¥814 $6,263

Payments made 236 382 2,509

Remaining payments ¥353 ¥432 $3,754

Tools, furniture and fixtures

Original lease obligations ¥122 ¥372 $1,297

Payments made 108 317 1,148

Remaining payments ¥14 ¥55 $149

Intangible assets

Original lease obligations ¥72 ¥227 $766

Payments made 61 194 649

Remaining payments ¥11 ¥34 $117

Future minimum lease receipts as lessor under operating leases for the remaining lease periods as of March 31, 2013 and 2012 were ¥2,433 million

($25,869 thousand) and ¥2,798 million, respectively, of which ¥298 million ($3,169 thousand) and ¥365 million, respectively, was due within one

year.

37

15. SEGMENT INFORMATION

1. Overview of reportable segments

Toyobo’s reportable segments allow it to acquire financial data separated into the various components of the corporate group. The scope of the

segments is reviewed on a regular basis in order to allow the highest decision making body to determine the allocation of management resources

and evaluate earnings performance. Toyobo’s basic organization comprises business headquarters and business divisions within the head office

separated by the type, nature and market for products and services. Each business headquarters and business division formulates comprehensive

strategies for its domestic and overseas operations and conducts business activities.

Accordingly, Toyobo organizes business segments by product and service. Its five reportable segments are “Films and Functional Polymers,”

“Industrial Materials,” “Life Science,” “Textiles” and “Real Estate.” The “Films and Functional Polymers” segment manufactures and sells packaging

films, industrial films, industrial adhesives, engineering plastics, optical function materials, photo-sensitive printing plates and other products. The

“Industrial Materials” segment manufactures and sells fiber materials for automotive applications, high-performance fibers, functional filters,

non-woven fabrics and other products. The “Life Science” segment manufactures and sells bio-products such as enzymes for diagnostics, contract

manufacturing of pharmaceuticals, medical-use membranes, medical equipment and equipment devices, water treatment membranes and other

products. The “Textiles” segment manufactures and sells functional textiles, apparel products, apparel textiles, apparel fibers and other products.

The “Real Estate” segment leases and manages real estate.

(Changes in reporting segments)

On April 1, 2012, the Company implemented a reorganization with the objectives of further strengthening teamwork among manufacturing, sales,

and product development and further strengthening asset allocations to priority issues and growth businesses. As part of this reorganization, the fine

chemicals business, which was formerly classified in the Life Science business segment, was moved to the Films and Functional Polymers segment.

Accompanying this change, the results for the previous fiscal year were also restated to reflect this reclassification.

(Changes in accounting policy that are difficult to distinguish from changes in accounting estimates)

As previously mentioned in “Changes in accounting methods,” the Company and its domestic consolidated subsidiaries have changed their method

for calculating the depreciation of tangible fixed assets for the year ended March 31, 2013. As a result, segment income was higher than it would

have been in the absence of this change. The operating income for Films and Functional Polymers, Industrial Materials, Life Science, Textiles, Real

Estate, and Other was ¥1,668 million ($17,735 thousand), ¥405 million ($4,306 thousand), ¥566 million ($6,018 thousand), ¥154 million ($1,637

thousand), ¥201 million ($2,137 thousand), and ¥43 million ($457 thousand) more, respectively, for the year ended March 31, 2013 than the

amounts that would have been reported without the change.

2. The methods of accounting for business segments are the same as those stated in Note 2, “Significant Accounting Policies.” Income of the

reporting segments is operating income. Transfers among segments are based on market prices.

Millions of yen

Year ended March 31, 2013

Net sales to external customers

Intersegment net sales and

transfer amountsNet sales Segment

income Identifiable

assets

Depreciationand

amortizationCapital

expenditure

Films and Functional Polymers

¥137,394 ¥1 ¥137,395 ¥7,634 ¥141,534 ¥5,834 ¥7,764

Industrial Materials 71,891 197 72,088 5,453 70,293 2,471 3,311

Life Science 24,839 90 24,930 4,170 27,307 1,414 3,636

Textiles 79,211 221 79,432 213 71,980 1,708 1,733

Real estate 3,741 1,312 5,053 1,680 44,925 671 295

317,076 1,821 318,898 19,149 356,039 12,098 16,739

Other businesses 21,932 12,072 34,005 1,060 21,499 507 548

Total 339,009 13,893 352,903 20,210 377,538 12,605 17,287 Elimination or Corporate - (13,893) (13,893) (3,128) 69,908 641 755

Consolidated ¥339,009 - ¥339,009 ¥17,081 ¥447,446 ¥13,246 ¥18,042

38

39



Net sales to externalcustomers


transfer amountsNet sales Segment

income Identifiable

assets

Depreciationand

amortizationCapital

expenditure


$1,460,861 $11 $1,460,872 $81,170 $1,504,880 $62,031 $82,552

Industrial Materials 764,391 2,095 766,486 57,980 747,400 26,273 35,205

Life Science 264,104 957 265,072 44,338 290,346 15,035 38,660

Textiles 842,222 2,350 844,572 2,265 765,338 18,161 18,426

Real estate 39,777 13,950 53,727 17,863 477,671 7,135 3,137

3,371,355 19,363 3,390,729 203,616 3,785,635 128,635 177,980

Other businesses 233,195 128,368 361,563 11,271 228,591 5,391 5,827

Total 3,604,550 147,731 3,752,292 214,887 4,014,226 134,026 183,807 Elimination or Corporate - (147,731) (147,719) (33,259) 743,307 6,816 8,028

Consolidated $3,604,550 - $3,604,573 $181,628 $4,757,533 $140,842 $191,835

Note: 1. Other includes design and construction of buildings, equipment, etc., information services, logistics services and other items.

2. (a) Includes segment income adjustment of ¥-3,128 million ($-33,259 thousand), eliminations of intersegment transactions of ¥-323 million

($-3,434 thousand) and companywide expenses that are not allocated across reporting segments of ¥-2,805 million ($-29,825

thousand). The principal components of companywide expenses are those related to basic research and development.

(b) The intersegment adjustment of ¥69,908 million ($743,307 thousand) is included in companywide assets that are not allocated across

reporting segments and which amount to ¥92,574 million ($984,306 thousand) in total.

(c) The increase in the adjustment of tangible and intangible fixed assets of ¥755 million ($8,028 thousand) is the amount of capital

investment related to research and development

3. Segment income has been adjusted with operating income on the consolidated financial statements.

Millions of yen


Net sales to external customers


transfer amounts

Net sales Segment income

Identifiableassets

Depreciationand

amortizationCapital

expenditure


¥138,437 ¥445 ¥138,882 ¥8,574 ¥139,265 ¥8,740 ¥8,857

Industrial Materials 71,221 79 71,300 5,342 70,892 3,564 2,435

Life Science 26,580 40 26,620 4,133 25,043 2,482 1,407

Textiles 87,999 1,176 89,175 1,058 79,471 2,355 2,141

Real estate 3,793 1,269 5,062 1,353 45,907 887 473

328,030 3,009 331,039 20,460 360,578 18,028 15,313

Other businesses 21,474 12,251 33,724 1,125 20,710 422 301

Total 349,505 15,260 364,763 21,585 381,288 18,450 15,614 Elimination or Corporate - (15,260) (15,259) (3,280) 56,552 1,022 904

Consolidated ¥349,505 - ¥349,505 ¥18,305 ¥437,840 ¥19,472 ¥16,518

Note: 1. Other includes design and construction of buildings, equipment, etc., information services, logistics services and other items.

2. (a) The segment operating income adjustment of ¥-3,280 million in this Elimination or Corporate includes, eliminations of intersegment

transactions of ¥-362 million and companywide expenses that are not allocated across reporting segments of ¥-2,918 million. The

principal components of companywide expenses are those related to basic research and development.

(b) The intersegment adjustment of ¥56,553 million is included in companywide assets that are not allocated across reporting segments

and which amount to ¥80,567 million in total.

(c) The increase in the adjustment of tangible and intangible fixed assets of ¥904 million is the amount of capital investment related to

research and development

40

3. Segment income has been adjusted with operating income on the consolidated financial statements.

Related information

Sales in Japan, Southeast Asia and other areas are as follows:


2013 2012 2013

Japan ¥259,831 ¥273,456 $2,762,690

Southeast Asia 48,016 46,375 510,537

Other areas 31,162 29,673 331,334

Total ¥339,009 ¥349,504 $3,604,561

Impairment loss for each segment

Millions of yen Thousand of U.S. dollars

2013 2012 2013

Films and Functional Polymers ¥- ¥- $-

Industrial Materials 1,664 - 17,693

Life Science - - -

Textiles - - -

Real estate 4 - 43

Other businesses - - -

Total 1,668 - 17,736

Elimination or Corporate - - -

Consolidated ¥1,668 ¥- $17,736

Amortization and balance of goodwill at the end March 31, 2013




Balance of goodwill


Balance of goodwill

Films and Functional Polymers ¥164 ¥283 $1,744 $3,009

Industrial Materials - - - -

Life Science - - - -

Textiles 8 - 85 -

Real estate - - - -

Other businesses - - - -

Total 172 283 1,829 3,009

Elimination or Corporate - - - -

Consolidated ¥172 ¥283 $1,829 $3,009

41

Amortization and balance of negative goodwill due to business combination before April 1, 2010 at the end March 31, 2013



Amortization of negative goodwill

Balance of negative goodwill



Films and Functional Polymers ¥- ¥- $- $-

Industrial Materials - - - -

Life Science - - - -

Textiles 108 - 1,148 -

Real estate 838 1,258 8,910 13,376

Other businesses - - - -

Total 946 1,258 10,058 13,376

Elimination or Corporate - - - -

Consolidated ¥946 ¥1,258 $10,058 $13,376

Amortization and balance of goodwill at the end March 31, 2012

Millions of yen



Balance of goodwill

Films and Functional Polymers ¥163 ¥446

Industrial Materials - -

Life Science - -

Textiles 16 8

Real estate - -

Other businesses - -

Total 179 454

Elimination or Corporate - -

Consolidated ¥179 ¥454

Amortization and balance of negative goodwill due to business combination before April 1, 2010 at the end March 31, 2012

Millions of yen




Films and Functional Polymers ¥- ¥-

Industrial Materials - -

Life Science - -

Textiles 141 108

Real estate 838 2,096

Other businesses - -

Total 979 2,204

Elimination or Corporate - -

Consolidated ¥979 ¥2,204

Gain on negative goodwill by reporting segment

There is nothing to report for the year ended March 31, 2013

In the Films and Functional Polymers segment, negative goodwill of ¥27 million was incurred as a result of the purchase by a consolidated

subsidiary of its own shares for the year ended March 31, 2012

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16. LAND REVALUATION EXCESS

Applying the law on revaluation of land, the Company, a consolidated subsidiary and an affiliate accounted for using the equity method revaluated

land for business use on March 31, 2002 and included the increase, net of income taxes and minority interests, in net assets. As of March 31, 2013

and 2012, respectively, the fair value of land was ¥30,069 million ($319,713 thousand) and ¥28,516 million lower than book value. Another

consolidated subsidiary revaluated its land for business use on March 31, 2000 and included the increase, net of income taxes and minority

interests, in net assets. As of March 31, 2013 and 2012, respectively, the fair value of land was ¥2,923 million ($31,079 thousand) and ¥2,859

million lower than book value.

17. INVESTMENT AND RENTAL PROPERTY

The Company and some of its consolidated subsidiaries hold investment and rental office buildings (including land) located in Osaka and other

areas. For the fiscal years ended March 31, 2013 and 2012, the rental income on these real estate properties was ¥1,976 million ($21,010

thousand) and ¥1,821 million (the principal rental income is recorded in sales and the principal rental expenses are recorded in cost of sales),

respectively. The profit from the sale of fixed assets was ¥31 million ($330 thousand) and ¥8 million (recorded in other income (expenses)) for the

years ended March 31, 2013 and 2012, respectively. Loss on the sale of fixed assets was ¥96 million ($1,021 thousand) and ¥20 million (recorded

in other income (expenses)) for the years ended March 31, 2013 and 2012, respectively, and impairment loss was ¥4 million ($43 thousand)

(recorded in other income (expenses)) for the year ended March 31, 2013.

The following table summarizes the carrying amount, the change during the fiscal year and the estimated fair value of the investment and rental

property.


2013 2012 2013

Balance at the end of March 31, 2012 and 2011 ¥32,821 ¥33,092 $348,974

Decrease in the fiscal term (1,179) (271) (12,536)

Balance at the end of March 31, 2013 and 2012 ¥31,642 ¥32,821 $336,438

Fair value on March 31, 2013 and 2012 ¥39,099 ¥41,545 $415,726

Note: 1. The carrying amount represents the net amount calculated as the acquisition cost less accumulated depreciation and impairment loss.

2. For the fiscal year ended March 31, 2012, the principal item contributing to the decrease was the sale of assets of ¥154 million. The

change during the fiscal year ended March 31, 2013 was attributable mainly to a decrease in rental properties of ¥917 million ($9,750

thousand) and to a decrease due to the sale of assets of ¥194 million ($2,063 thousand).

3. The fair value on March 31, 2013 and 2012 was based on real estate appraisal reports provided by external real estate appraisers for major properties and the index considered to

reflect the current market price for other properties.

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18. CASH FLOW INFORMATION

Cash on hand, readily available deposits and short-term highly liquid investments with maturities not exceeding three months at the time of

purchase are considered to be cash and cash equivalents in preparing the consolidated statements of cash flows.

The reconciliation of cash and cash equivalents in the consolidated balance sheets and cash and cash equivalents in the consolidated statements

of cash flows as of March 31, 2013 and 2012 was as follows:


2013 2012 2013

Cash and cash equivalents in the consolidated balance sheets ¥26,600 ¥9,608 $282,828

Time deposits maturing after three months (133) (127) (1,414)

Cash and cash equivalents in the consolidated statements of cash flows ¥26,467 ¥9,481 $281,414

For the year ended March 31, 2013, Angle Miyuki Co., Ltd. was excluded from the Group following the sale of its stock. Assets and liabilities of the

subsidiary at the time of sale, cash received by selling the stock and net cash received for the sale were as follows:


Assets ¥2,582 $27,453

Liabilities (2,722) (28,942)

Negative goodwill (1) (11)

Net gain on sale of the stock 141 1,499

Cash received by selling the stock 0 (1)

Collections of short-term loans receivable 1,676 17,820

Cash and cash equivalents of consolidated subsidiary (46) (489)

Cash received in conjunction with the sale of consolidated subsidiary ¥1,630 $17,330

44

19. COMPREHENSIVE INCOME

Amounts reclassified to net income in the current period that were recognized in other comprehensive income in the current or previous period and

the tax effects for each component of other comprehensive income were as follows:


2013 2012 2013

Valuation difference on available-for-sale securities

Increase during the year ¥4,676 ¥995 $49,718

Reclassification adjustments (2,074) (107) (22,052)

Subtotal, before tax 2,602 888 27,666

Tax of benefit (883) (174) (9,389)

Subtotal, net of tax 1,719 714 18,277

Deferred gains and losses on hedges

Decrease during the year (136) (43) (1,446)

Reclassification adjustments 211 127 2,243

Subtotal, before tax 75 84 797

Tax of benefit (30) (42) (319)

Subtotal, net of tax 45 42 478

Land revaluation excess

Tax of benefit - 3,428 -

Foreign currency translation adjustments

Decrease during the year 852 (829) 9,059

Share of other comprehensive income of associates accounted for using the equity method

Decrease during the year 105 (11) 1,116

Total other comprehensive income ¥2,721 ¥3,344 $28,931

20. LAWSUITS

Lawsuit for damages brought against the Company by the U.S. Department of Justice.

The U.S. Department of Justice has filed a lawsuit in the United States against Toyobo and Toyobo’s U.S. subsidiary, Toyobo U.S.A., Inc. for

violating U.S. False Claims Act, for fraud and for unjust enrichment in relation with bulletproof vests which a U.S. company named Second Chance

Body Armor, Inc. manufactured and distributed using Toyobo’s “Zylon” fibers and which were purchased by the U.S. government.

In addition, regarding bulletproof vests which a number of U.S. companies, other than Second Chance, (including Armor Holding, Inc.)

manufactured and distributed using Toyobo’s “Zylon” fibers and which were purchased by the U.S. government, the Department of Justice has filed

a lawsuit against Toyobo and Toyobo U.S.A., Inc. for violating U.S. False Claims Act, for fraud and for unjust enrichment.

These lawsuits are pending in court, but Toyobo is continuing to argue that it was not at fault and will take appropriate actions to defend its case.

45

21. RELATED PARTY TRANSACTIONS

Related party transactions for the year ended March 31, 2013 and 2012 were as follows:

1. For the year ended March 31, 2013

There were no material related party transactions to report.

2. For the year ended March 31, 2012

There were no material related party transactions to report.

22. SUBSEQUENT EVENTS

At the Company’s ordinary meeting of stockholders held on June 27, 2013, appropriations of retained earnings for the year ended March 31, 2013

were duly approved as follows:

Thousands of

Millions of yen U.S. dollars

Cash dividends - ¥3.50 ($0.037) per share ¥3,110 $33,068

Documents

TOYOBO CO., LTD. CONSOLIDATED FINANCIAL ......March 31, 2013 and 2012 Disclaimer Regarding Forward-Looking Statements This report describes not only the past and present facts about