What interior products can do for global warming prevention. Annual Report 2008 SUMINOE TEXTILE CO., LTD.

Transcription

1 What interior products can do for global warming prevention Annual Report 2008 SUMINOE TEXTILE CO., LTD.

2 MESSAGE FROM THE PRESIDENT Ichizo Yoshikawa, President Corporate Philosophy We take pride in being a pioneer in the interior design and furnishings industry, and dedicate ourselves to the creation of comfortable living spaces with unique character. We put our corporate philosophy into practice on a daily basis and maintain high ethical standards in all aspects of our business operations, so as to continuously enhance Suminoe Textile s profile as a leader in its industry. We have drawn up the Code of Conduct set out below to serve as the core principles of our compliance-based management, for observance by all officers and employees of the Company as individuals, and by the Company itself as a collective body. Code of Conduct We comply with all laws and social norms, and conduct corporate activities in an impartial and ethically sound manner. We contribute to the advancement of the community through the production and sale of good-quality products. We treat all employees of the Company fairly, act with due respect for their individual personalities, and place high importance on their health and safety. We place high priority on maintaining good relationships with all our stakeholders. We make proactive contributions to the community, as expected of a good corporate citizen. We take very seriously the impact of our business activities on the global environment, and contribute to environmental preservation initiatives. Target Business Indicators The Suminoe Textile Group has set itself medium- to longterm targets of 6% or higher for ROE and 4% or higher for ROA. The management is effectively allocating management resources with the aim of realizing a steady increase in operating cash flows as a precondition for improving profitability and raising the Group s enterprise value. Overview of the Term under Review During the first half of the reporting period the Japanese economy continued to grow at a moderate pace, as indicated by healthy capital investments and an improving employment situation. In the latter half, however, the sudden eruption of the subprime loan problem in the United States led to CONSOLIDATED FINANCIAL HIGHLIGHTS Net Sales (Millions of Yen) Net Income (Millions of Yen) Total Assets (Millions of Yen) 100,000 3,000 2, ,000 80,000 68,957 69,926 60,000 75,493 76,670 80,869 2,000 1,503 2,134 80,000 69,178 60,000 70,762 77,446 77,177 79,936 40,000 1,000 1, ,000 20,000 20,

3 instability on world capital markets. As a consequence, Japanese companies business performances, which had been holding firm up to that point, began to stagnate, and rising commodity prices caused consumer spending to weaken. Due to these factors, the overall economy entered a slowdown. The operating environment for the Suminoe Textile Group was also difficult. The enforcement of amendments to the Building Standards Law caused a sharp decrease in the number of new housing starts, while raw materials prices rose steeply due to the ripple effects of the high crude oil price. These factors led to a rapid deterioration in market conditions of the interior fittings industry. In the automobile interior fittings industry, too, demand was sluggish in the Japanese market, while competition was severe in the global market. Faced with rising costs due to the high price of raw materials on the one hand and low selling prices on the other, the Group endured increasingly harsh operating conditions. In these circumstances, in line with the basic policies of its ACTION-2008 medium-term management plan, the Suminoe Textile Group took proactive steps in each of its operating segments, thanks to which it succeeded in posting a 5.5% increase in sales on a consolidated basis, to 80,869 million (US$764,719 million) and a 13.7% growth in operating income, to 2,302 million (US$21,768 million). Net income, however, recorded a year-on-year decline of 63.9%, to 983 million (US$9,296 million). This major deterioration in net income from the previous year is primarily attributable to a substantial change in deferred income taxes, under which a negative figure had been recorded for the previous periods. However, as the Company eliminated tax loss carryforwards in the previous term, it has shortened the period used for the estimation of taxable income in the future. As a result, deferred tax assets increased, and a positive figure was recorded in deferred income taxes for the reporting period. Business Overview by Segment Interior fittings segment The interior fittings market had been following a recovery trend, but the ripple effects from the enforcement of amendments to the Building Standards Law led to a complete reversal of direction. The earnings of this segment also came under downward pressure from the high prices of raw materials, and it became extremely difficult to secure an adequate profit. Against this background, Group companies Suminoe Co., Ltd. and Runon Co., Ltd. took the lead in actively marketing environmentally friendly products to gain larger market shares. In carpets, the recycled carpet tile SG-300 recorded a major year-on-year growth in sales. In addition to the product s excellent functionality, its strong sales are attributable to the fact that the SG-300 production processes emit less carbon dioxide than conventional products, thus helping address the growing worldwide concern with combating global warming. For its surface pile fibers, SG-300 uses a special polyester fiber named SUMITRON, which is made from recycled PET bottles. For the backing material we use Millions of Yen U.S. Dollars* 1 Years ended May Net sales... 80,869 76,670 75,493 69,926 68,957 $764,719 Income before income taxes and minority interests... 2,233 2,211 2,162 1,387 1,356 21,116 Net income ,720 2,134 1,028 1,503 9,296 Total assets... 79,936 77,177 77,446 70,762 69, ,896 Total equity* ,153 29,512 27,223 22,786 22, ,222 Amounts per share (in yen and U.S. dollars): Net income* $0.12 Cash dividends applicable to the year *1. U.S. dollar amounts are converted from Japanese yen amounts at the rate of U.S.$1 to , the approximate rate on May 31, *2. Amounts posted under total equity represent the total sum of equity and minority interests. For the term ended May 2005 and before, the corresponding figures represent amounts posted under shareholders equity using the previous accounting standards. *3. Net income per share of common stock is computed based on the weighted average number of shares outstanding. 2

4 MESSAGE FROM THE PRESIDENT a carpet tile material that includes a proportion of powderized used carpet tiles. SG-300 has received the Eco Mark certification. Compared with conventional nylon carpet tiles, the production processes of SG-300 emit 19% less carbon dioxide, and for this reason the product has won considerable plaudits. The pile for SG-300 is manufactured by Group company Suminoe Koka Co., Ltd., and Suminoe Nara Co., Ltd. creates the finished product. This carpet tile has been made possible by the Suminoe Textile Group s unrivalled integrated production system, and it is an eloquent testimony to the Group s outstanding capabilities in product planning and development. During the reporting period we launched a number of new products on the market incorporating our TRIPLE FRESH technology for the absorption and breakdown of substances that cause unpleasant odors, including formaldehyde, tobacco smoke, and other odors produced in daily life. These products, including the U-Life Vol. 4 curtains and the TF-V Vol. 2 air-cleaning wall coverings racked up favorable sales thanks to their contribution to improving interior environments. In these ways, we worked actively to develop the Suminoe brand centering on environmentally friendly products. As a result, in the Interior Fittings segment we recorded sales of 37,864 million (US$358,052 million), up 0.7% year-on-year, and operating income of 1,047 million (US$9,901 million), down 0.5%. Automotive textile and traffic facilities segment In the field of textile products for automotive interiors, the number of cars sold in Japan fell below the previous year s level. In addition, raw material prices continued to rise, further downward pressure was applied to product selling prices, and increased competition was experienced in both product development and marketing. The business environment was thus very severe for this segment. In response to this situation, the Group leveraged its strengths as a comprehensive maker of automotive interior fabrics to aggressively market such value-added products as sound absorption carpets and odor-absorbent seat coverings and ceiling coverings. These initiatives led to growth in sales in the Japanese market. On overseas markets, our U.S. subsidiary Suminoe Textile of America Corporation (STA) installed additional production facilities for carpets and seat coverings during the reporting period, and has been enjoying a steady growth in both orders and sales. In China, our subsidiary SPM Automotive Textile Co., Ltd. (SPM) expanded its production of car seat coverings and ceiling coverings, and the company s importance to the Group as a manufacturing base within the Chinese market increased. In the field of interior fabrics for buses and train cars, we saw year-on-year drop in sales for use in buses (whose production volume is on the decrease in Japan), but sales to Japan Railway Companies and private railway operators remained strong. Other developments during the term included raising the rate of in-house production of easily recyclable polyester seat cushions. Thanks to our enhanced capabilities in product planning and proposal-based marketing, our fabrics were selected for use in the new N700 Shinkansen train model, and our market share increased. As a result of the above, total sales in the automotive textile and traffic facilities segment rose by 11.8% over the previous term, to 38,098 million (US$360,265 million), and operating income posted an increase of 13.8%, to 2,575 million (US$24,350 million). Others The Group recorded firm sales in the Original Equipment Manufacturer business and in electric carpets and other businesses, particularly of products for use in aircraft, as well as overseas sales. Increased orders were received for electric carpets, and production volume was raised at our Chinese manufacturing subsidiary Suzhou Suminoe Textiles Co., Ltd. The polyester fiber SUMITRON, manufactured by Suminoe Koka Co., Ltd. recycled from PET bottles, attracted attention for its environmentally friendly features, and is now being used not only in interior goods such as carpets, rugs, mats, and curtains, but also in interior cleaning products such as dust-control mats. The production volume of SUMITRON has now topped 2,300 tonnes per annum. In spite of these positive developments, total sales for this segment declined by 1.9% to 4,907 million (US$46,402 million), and operating income was down 10.5%, at 211 million (US$1,995 million). Medium- and Long-Term Management Strategies and Issues Progress made under the ACTION-2008 medium-term management plan The two main goals of the Group s ACTION-2008 mediumterm management plan, adopted in June 2006, are the strengthening of our business structure and the expansion of our profit base. During the term under review, the second year of the plan, we carried out a number of measures designed to achieve these goals. As a result, we succeeded 3

5 in posting annual sales of 80,000 million the target for the third and final year of the plan one year ahead of schedule. We also made good progress toward achieving other final goals under the plan by reducing the balance of interest-bearing liabilities and expanding sales overseas. The management and employees of the Suminoe Textile Group are working in unison to achieve the final numerical targets under ACTION-2008 in the Group s 2008 fiscal year, ending May 2009, which is the final year of the plan. committed to developing environmentally friendly products under our slogan of KKR+A (K for kenko [health], K for kankyo [environment], R for recycling, and A for amenity). We were the first in our industry in Japan to tackle the task of creating environmentally friendly products, and our efforts have been steadily rewarded with success. From here onward, in addition to our KKR+A concept, we will also be focusing on the product safety issue in the expansion of our lineup of environment-friendly products. Strengthening our manufacturing system We are undertaking programs at our manufacturing plants in Japan to raise production efficiency through process improvement. These initiatives are being carried out under the fundamental concept of thorough elimination of waste and inefficiency as the main means of lowering the cost of sales. At the Osaka Plant of Suminoe Textile as well as the Nara Plant operated by subsidiary Suminoe Nara Co., Ltd., measures have been implemented to radically lower the incidence of defective products, raise production yields, and ensure that production facilities are always in full working order through preemptive maintenance work. Both plants have attained their targets in these respects. We have also set up a team to oversee collaboration with companies outside the Group. This team helps affiliates and business partners to improve their production processes, which contributes to realizing better business performances and a stronger financial position for the Suminoe Textile Group as a whole. At Suminoe Koka Co., Ltd., a subsidiary plant located in Shiga Prefecture, investment is being made in the expansion of production facilities for the environmentally friendly fiber SUMITRON (made from recycled PET bottles). This is part of Groupwide efforts to strengthen our product supply chain for environmentally friendly products. Overseas, our U.S. subsidiary STA has set an annual sales target of 10,000 million. To realize this target, we are providing focused support to the company in the areas of human resources and technology with the twin aims of improving STA s management and establishing a viable long-term earnings model. Meanwhile, at our Chinese subsidiary SPM, work is ongoing to set up a reliable materials procurement organization and establish an efficient production system. Outlook for the Current Term In the Group s current business term, ending May 2009, we forecast that the Japanese economy will enter a slowdown phase as a result of the persistent upward movement of crude oil prices and the serious weakness in the global economy stemming from the U.S. subprime loan problem. The present fiscal year is the final year under the Group s ACTION-2008 medium-term management plan. Not only do we intend to accomplish our objectives under the plan despite the unfavorable operating environment, we also plan to remold the Group into an entity more capable of effective response to the changing business scene. We will do this by reinforcing our global marketing and production structure, and by aggressively developing a wider range of environmentally friendly products. At the same time, we will be working to leverage the enthusiasm and skills of each of our employees to expand our market share and realize sustainable and adequate earnings. Basic Policy on Shareholder Returns and Dividends for the Term under Review and the Current Term The Company understands that shareholder returns are a key issue for management, and follows a policy of stable dividend returns. We will aim to make appropriate dividend payments, taking into account our business results and the need for retained earnings for flexible investment. Based on this policy, we paid 2.50 (US$0.02) per share as the yearend dividend. Consequently, our annual dividend for the term under review totaled 5.00 (US$0.05) per share, including the 2.50 (US$0.02) per share paid as the interim dividend. We will maintain this policy, and will again pay 5.00 (US$0.05) per share as the annual dividend for the current term ending May 31, Strengthening product development capabilities The reduction of carbon dioxide emissions is currently an urgent issue worldwide in the fight against global warming. Against this background, the Suminoe Textile Group is Ichizo Yoshikawa President 4

6 CONSOLIDATED BALANCE SHEETS Suminoe Textile Co., Ltd. and Subsidiaries May 31, 2008 and 2007 (Note 1) ASSETS Current assets: Cash and cash equivalents... 8,960 6,746 $ 84,728 Marketable securities (Note 3) ,366 Receivables: Trade notes... 9,378 9,332 88,681 Trade accounts... 12,469 11, ,910 Other... 1,242 1,311 11,745 Allowance for doubtful receivables... (43) (42) (407) Inventories (Note 4)... 10,302 8,913 97,419 Deferred tax assets (Note 8) ,362 Other... 1,504 1,001 14,222 Total current assets... 45,158 39, ,026 Property, plant and equipment (Notes 2.e and 5): Land... 16,737 16, ,270 Buildings and structures... 14,707 15, ,073 Machinery and equipment... 17,312 17, ,707 Construction in progress ,156 Total... 48,984 49, ,206 Accumulated depreciation... (24,811) (24,333) (234,620) Net property, plant and equipment... 24,173 24, ,586 Other assets: Investment securities (Notes 3 and 5)... 7,490 9,864 70,827 Investments in and loans to associated companies ,192 Deferred tax assets (Note 8) ,837 Other... 2,200 2,475 20,804 Allowance for doubtful accounts... (357) (309) (3,376) Total other assets... 10,605 12, ,284 Total... 79,936 77,177 $755,896 See notes to consolidated financial statements. 5

7 (Note 1) LIABILITIES AND EQUITY Current liabilities: Short-term borrowings (Note 5)... 7,848 8,408 $ 74,213 Current portion of long-term debt (Note 5)... 1,221 2,210 11,546 Payables: Trade notes... 5,820 3,978 55,036 Trade accounts... 16,441 13, ,470 Construction ,137 Accrued expenses... 3,035 2,792 28,700 Income taxes payable ,593 Other ,031 Total current liabilities... 35,926 32, ,726 Long-term liabilities: Long-term debt (Note 5)... 5,806 5,093 54,903 Liability for retirement benefits (Note 6)... 3,940 3,993 37,258 Deferred tax liabilities (Note 8) Deferred tax liabilities related to land revaluation excess (Note 2.e)... 5,445 5,445 51,489 Long-term accounts payable ,816 Other ,302 Total long-term liabilities... 15,857 15, ,948 Commitments and contingent liabilities (Notes 10 and 12) Equity (Notes 2.e, 7 and 13): Common stock authorized, 300,000,000 shares; issued, 76,821,626 shares in 2008 and ,554 9,554 90,345 Capital surplus... 2,653 2,653 25,087 Retained earnings... 6,429 6,052 60,794 Net unrealized gain on available-for-sale securities... 2,410 3,836 22,790 Deferred (loss) gain on derivatives under hedge accounting... (28) 2 (265) Land revaluation excess... 7,184 6,961 67,934 Foreign currency translation adjustments... (44) 175 (416) Treasury stock at cost; 1,197,711 shares in 2008 and 173,576 shares in (319) (42) (3,016) Total... 27,839 29, ,253 Minority interests ,969 Total equity... 28,153 29, ,222 Total... 79,936 77,177 $755,896 6

8 CONSOLIDATED STATEMENTS OF INCOME Suminoe Textile Co., Ltd. and Subsidiaries Years ended May 31, 2008 and 2007 (Note 1) Net sales... 80,869 76,670 $764,719 Cost of sales... 63,844 60, ,726 Gross profit... 17,025 16, ,993 Selling, general and administrative (Note 9)... 14,723 14, ,225 Operating income... 2,302 2,025 21,768 Other income (expenses): Interest and dividend income ,409 Net gain on sales of securities Rental income ,052 Interest expense... (264) (246) (2,496) Rental expense... (60) (64) (567) Loss on sales and disposal of property, plant and equipment... (44) (72) (416) Impairment loss for long-lived assets... (17) (161) Equity in losses of associated companies... (316) (325) (2,988) Other net ,354 Other income (expenses) net... (69) 186 (652) Income before income taxes and minority interests... 2,233 2,211 21,116 Income taxes (Note 8): Current... (987) (747) (9,333) The prior years income taxes... (148) (1,399) Deferred... (102) 1,225 (965) Total income taxes... (1,237) 478 (11,697) Minority interests... (13) 31 (123) Net income ,720 $ 9,296 Yen U.S. Dollars Per share of common stock (Note 2.n): Net income $0.12 Cash dividends applicable to the year See notes to consolidated financial statements. 7

9 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Suminoe Textile Co., Ltd. and Subsidiaries Years ended May 31, 2008 and 2007 Thousands Millions of Yen Outstanding Unrealized gain (loss) Deferred gain (loss) on number of shares of common stock Common stock Capital surplus Retained earnings on available-for-sale securities derivatives under hedge accounting Balance, June 1, ,686,311 9,554 2,653 3,792 3,888 (24) Net income... 2,720 Cash dividends, 6.0 per share... (459) Purchase of treasury stock... (38,261) Net change in the year... (1) (52) 26 Balance, May 31, ,648,050 9,554 2,653 6,052 3,836 2 Net income Cash dividends, 5.0 per share... (383) Purchase of treasury stock... (1,024,135) Net change in the year... (223) (1,426) (30) Balance, May 31, ,623,915 9,554 2,653 6,429 2,410 (28) Land revaluation excess Foreign currency translation adjustments Treasury stock Millions of Yen Minority interests Total equity Total Balance, June 1, , (27) 26, ,223 Net income... 2,720 2,720 Cash dividends, 6.0 per share... (459) (459) Purchase of treasury stock... (15) (15) (15) Net change in the year (77) 43 Balance, May 31, , (42) 29, ,512 Net income Cash dividends, 5.0 per share... (383) (383) Purchase of treasury stock... (277) (277) (277) Net change in the year (219) (1,675) (7) (1,682) Balance, May 31, ,184 (44) (319) 27, ,153 Common stock Capital surplus U.S. Dollars (Note 1) Retained earnings Unrealized gain (loss) on available-for-sale securities Deferred gain (loss) on derivatives under hedge accounting Balance, May 31, $90,345 $25,087 $57,229 $36,274 $ 19 Net income... 9,296 Cash dividends, $0.05 per share... (3,622) Purchase of treasury stock... Net change in the year... (2,109) (13,484) (284) Balance, May 31, $90,345 $25,087 $60,794 $22,790 $(265) Land revaluation excess Foreign currency translation adjustments U.S. Dollars (Note 1) Treasury stock Minority interests Total equity Total Balance, May 31, $65,825 $1,655 $ (397) $276,037 $3,035 $279,072 Net income... 9,296 9,296 Cash dividends, $0.05 per share... (3,622) (3,622) Purchase of treasury stock... (2,619) (2,619) (2,619) Net change in the year... 2,109 (2,071) (15,839) (66) (15,905) Balance, May 31, $67,934 $ (416) $(3,016) $263,253 $2,969 $266,222 See notes to consolidated financial statements. 8

10 CONSOLIDATED STATEMENTS OF CASH FLOWS Suminoe Textile Co., Ltd. and Subsidiaries Years ended May 31, 2008 and 2007 (Note 1) Operating activities: Income before income taxes and minority interests... 2,233 2,211 $ 21,116 Adjustments for: Income taxes paid... (863) (550) (8,161) Depreciation and amortization... 1, ,291 Increase (decrease) in allowance for doubtful receivables and accounts (31) 463 Net gain on sales of securities... (15) (300) (142) Loss on sales and disposal of property, plant and equipment Changes in assets and liabilities: Increase in notes and accounts receivable... (1,647) (765) (15,574) Increase in inventories... (1,509) (219) (14,269) Increase (decrease) in notes and accounts payable trade... 4,829 (288) 45,664 Decrease in liability for retirement benefits... (54) (66) (511) (Increase) decrease in other current assets... (511) 17 (4,832) Increase in other current liabilities ,125 Decrease in long-term accounts payable... (259) (373) (2,449) Other net ,459 Total adjustments... 2,483 (978) 23,480 Net cash provided by operating activities... 4,716 1,233 44,596 Investing activities: Proceeds from sales of property, plant and equipment ,740 Purchases of property, plant and equipment... (1,136) (1,460) (10,742) Proceeds from sales and redemption of securities... 13,550 13, ,132 Purchases of marketable and investment securities... (13,551) (13,103) (128,142) Increase in other assets... (153) (151) (1,447) Net cash used in investing activities... (1,106) (1,041) (10,459) Financing activities: Net change in short-term borrowings... (382) (552) (3,613) Proceeds from long-term debt... 2,051 2,600 19,395 Repayments of long-term debt... (2,327) (3,286) (22,005) Purchase of treasury stock... (277) (15) (2,619) Proceeds from share issues to minority shareholders Dividends paid... (381) (456) (3,603) Dividends paid to minority shareholders... (7) (20) (66) Net cash used in financing activities... (1,323) (1,676) (12,511) Foreign currency translation adjustments on cash and cash equivalents... (72) 46 (680) Net increase (decrease) in cash and cash equivalents... 2,214 (1,438) 20,936 Cash and cash equivalents, beginning of year... 6,746 8,184 63,792 Cash and cash equivalents, end of year... 8,960 6,746 $ 84,728 See notes to consolidated financial statements. 9

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Suminoe Textile Co., Ltd. and Subsidiaries Years ended May 31, 2008 and Basis of presenting consolidated financial statements The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law (formerly, the Japanese Securities 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 of International Financial Reporting Standards. In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2007 financial statements to conform to the classifications used in The consolidated financial statements are stated in Japanese yen, the currency of the country in which Suminoe Textile Co., Ltd. (the Company ) is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of to $1, the approximate rate of exchange at May 31, Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. 2. Summary of significant accounting policies a. Consolidation The accompanying consolidated financial statements as of May 31, 2008 include the accounts of the Company and all subsidiaries (together, the Group ). Under the control or influence concept, those companies which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated. Investments in associated companies are accounted for by the equity method. Costs in excess of net assets of subsidiaries at the date of acquisition that cannot be specifically assigned to individual assets are being amortized over a period of not exceeding 20 years. All significant intercompany transactions and balances have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Group is eliminated. b. Cash equivalents Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits that represent short-term investments, all of which mature within three months of the date of acquisition. c. Inventories Inventories are stated at cost determined by the average method. d. Marketable and investment securities Marketable and investment securities are classified and accounted for, depending on management s intent, as follows: i) trading securities, which are held for the purpose of earning capital gains in the near term, are reported at fair value, and the related unrealized gains and losses are included in earnings, ii) held-to-maturity debt securities, which management has the positive intent and ability to hold to maturity, are reported at amortized cost, and iii) available-for-sale securities, which are not classified as either of the aforementioned securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported as a separate component of equity. Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable available-for-sale securities are reduced to net realizable value by a charge to income. e. Property, plant and equipment Property, plant and equipment except land are stated at cost. Depreciation is computed over the estimated useful lives of the assets by the declining-balance method while the straight-line method is applied to buildings acquired after April 1, 1998, at rates based on the useful lives of the assets. The range of estimated useful lives is principally from 3 to 50 years for buildings and from 4 to 17 years for machinery and equipment. Under the Law of Land Revaluation, promulgated and revised on March 31, 1998 and 1999, respectively, the Company elected a one-time revaluation of its own-use land to a value based on real estate appraisal information as of May 31, The resulting land revaluation excess represents unrealized appreciation of land and is stated, net of income taxes, as a component of equity. There was no effect on the consolidated statement of income. Continuous readjustment is not permitted unless the land value subsequently declines significantly such that the amount of the decline in value should be removed from the land revaluation excess account and related deferred tax liabilities. As of May 31, 2008, the carrying amount of the land after the above one-time revaluation exceeded the market value by 3,730 million ($35,272 thousand). f. Long-lived assets The Group reviewed their long-lived assets for impairment as of the year ended May 31, 2008 and, as a result, recognized an impairment loss of 17 million ($160 thousand) as other expense for certain idle lands. The carrying amount of the idle land was written down to its recoverable amounts. The certain subsidiary rents this land for the purpose of operating a parking lot. The recoverable amount was measured at its net selling price that was calculated by assessed value of fixed assets. g. Retirement benefits The companies have both lump-sum severance payments and defined contribution pension plan for employees retirement benefits. The Group account for the liability for retirement benefits based on the projected benefit obligations at the balance sheet date. In addition, certain subsidiaries have a contributory trusted pension plan covering most of their employees together with multiemployers. They fund and record contributions as a charge to income as current period costs. The pension fund assets available for benefits under this plan were approximately 492 million ($4,652 thousand) and 542 million at May 31, 2008 and 2007, respectively. The Company provides for the liability for directors and corporate auditors retirement benefits at the amounts which would be required to be paid if all directors and corporate auditors retired at the balance sheet date. Amounts payable to directors and corporate auditors upon retirement are subject to the approval of shareholders. 10

12 h. Leases All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that do not transfer ownership of the leased property to the lessee are permitted to be accounted for as operating lease transactions if certain as if capitalized information is disclosed in the notes to the lessee s consolidated financial statements. i. Income taxes The provision for current income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences. j. Foreign currency transactions All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statements of income to the extent that they are not hedged by forward exchange contracts. k. Foreign currency financial statements The balance sheet accounts of foreign subsidiaries and associated companies are translated into Japanese yen at the current exchange rates as of the balance sheet dates except for equity, which is translated at the historical rates. Revenue and expense accounts of the foreign subsidiaries and associated companies are translated into Japanese yen at the average annual exchange rates. Differences arising from such translation are shown as Foreign currency translation adjustments as a separate component of equity. l. Derivatives and hedging activities The Company uses foreign exchange forward contracts and interest rate swaps to manage its exposures to fluctuations in foreign exchange and interest rates. The Company does not enter into derivatives for trading or speculative purposes. Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: a) all derivatives are recognized as either assets or liabilities and measured at fair value, and the resulting gains or losses are recognized in the consolidated statements of income and b) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on those derivatives are deferred until maturity of the hedged transactions. The foreign exchange forward contracts are utilized to hedge foreign currency exposures on overseas transactions. Trade payables and receivables denominated in foreign currencies are translated at the contracted rates if the forward contracts qualify for hedge accounting. The interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value but the differential paid or received under the swap agreements is recognized and included in interest expense or income. m. Bond issuance costs Bond issuance costs are charged to income as incurred. n. Per share information Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the year, retroactively adjusted for stock splits. The computations of net income per share of common stock are based on the weighted average number of shares outstanding during each year of 76,084,737 shares for the year ended May 31, 2008 and 76,667,234 shares for the year ended May 31, Diluted net income per share is not disclosed because the Group has not issued dilutive securities. Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including dividends to be paid after the end of the year. o. New accounting pronouncements Measurement of Inventories Under Japanese GAAP, inventories are currently measured either by the cost method, or at the lower of cost or market. On July 5, 2006, the Accounting Standards Board of Japan ( ASBJ ) issued ASBJ Statement No. 9, Accounting Standard for Measurement of Inventories, which is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. This standard requires that inventories held for sale in the ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less additional estimated manufacturing costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The standard also requires that inventories held for trading purposes be measured at the market price. Lease Accounting On March 30, 2007, the ASBJ issued ASBJ Statement No. 13, Accounting Standard for Lease Transactions, which revised the existing accounting standard for lease transactions issued on June 17, Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases are permitted to be accounted for as operating lease transactions if certain as if capitalized information is disclosed in the note to the lessee s financial statements. The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting standard for lease transactions is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements Under Japanese GAAP, a company currently can use the financial statements of foreign subsidiaries which are prepared in accordance with generally accepted accounting principles in their respective jurisdictions for its consolidation process unless they are clearly unreasonable. On May 17, 2006, the ASBJ issued ASBJ Practical Issues Task Force (PITF) No. 18, Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements. The new task force prescribes: 1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in 11

13 principle be unified for the preparation of the consolidated financial statements, 2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States tentatively may be used for the consolidation process, 3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material; (1) Amortization of goodwill (2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss (3) Capitalization of intangible assets arising from development phases (4) Fair value measurement of investment properties, and the revaluation model for property, plant and equipment, and intangible assets (5) Retrospective application when accounting policies are changed (6) Accounting for net income attributable to a minority interest The new task force is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. 3. Marketable and investment securities Marketable and investment securities as of May 31, 2008 and 2007 consisted of the following: Current Other securities $ 7,366 Non-current Equity securities... 7,490 9,864 70,827 The carrying amounts and aggregate fair values of marketable and investment securities at May 31, 2008 and 2007 were as follows: Millions of Yen 2008 Unrealized gains Unrealized losses Cost Fair value Securities classified as available-for-sale: Equity securities... 3,400 3, ,795 Government and corporate bonds Total... 3,424 3, ,817 Millions of Yen 2007 Unrealized gains Unrealized losses Cost Fair value Securities classified as available-for-sale: Equity securities... 3,389 5, ,191 U.S. Dollars 2008 Unrealized Unrealized Cost gains losses Fair value Securities classified as available-for-sale: Equity securities... $32,151 $34,364 $2,260 $64,255 Government and corporate bonds Total... $32,378 $34,364 $2,279 $64,463 Available-for-sale securities included in marketable and investment securities whose fair value is not readily determinable as of May 31, 2008 and 2007 were as follows: Carrying amount Available-for-sale: Equity securities $ 6,364 Other ,366 Total... 1,452 1,447 $13,730 Proceeds from sales of available-for-sale securities for the years ended May 31, 2008 and 2007 were 631 million ($5,967 thousand) and 3,719 million, respectively. Gross realized gains and losses on these sales, computed on the moving average cost basis, were 25 million ($236 thousand) and 10 million ($95 thousand), respectively for the year ended May 31, 2008 and 313 million and 13 million, respectively, for the year ended May 31, The carrying values of debt securities and investment funds in trust by contractual maturities for securities classified as available-forsale at May 31, 2008 are as follows: Due in one year or less $7, Inventories Inventories at May 31, 2008 and 2007 consisted of the following: Finished products and purchased merchandise... 7,449 6,847 $70,440 Work-in-process... 1,475 1,100 13,948 Materials and supplies... 1, ,031 Total... 10,302 8,913 $97, Short-term borrowings and long-term debt Short-term borrowings are principally comprised of bank overdrafts. As is customary in Japan, the Group obtains financing by discounting trade notes receivable with banks. The weighted average annual interest rates for short-term borrowings and notes discounted at May 31, 2008 and 2007 were 1.61% and 1.72%, respectively. Long-term debt at May 31, 2008 and 2007 consisted of the following: Unsecured bonds: 0.47%, due September , %, due June ,200 1,400 $11, %, due December ,728 Loans from banks, 1.30% to 2.30%, due serially to 2013: Collateralized... 1,636 1,804 15,471 Unsecured... 3,691 2,599 34,903 Total... 7,027 7,303 66,449 Less current portion... 1,221 2,210 11,546 Long-term debt, less current portion... 5,806 5,093 $54,903 12

14 At May 31, 2008, annual maturities of long-term debt, less current portion were as follows: Year Ending May ,018 $ 9, ,266 21, ,371 22, ,428 Total... 5,806 $54,903 At May 31, 2008, assets pledged as collateral for short-term borrowings of 1 million ($9 thousand) and long-term debt (including current portion) of 1,636 million ($17,059 thousand) were as follows: Property, plant and equipment, less accumulated depreciation... 9,113 $86,175 Investment securities... 3,144 29,730 Bank overdrafts are generally covered under basic written agreements which provide that additional collateral (including sums on deposit with such banks) or guarantors will be furnished at the banks request and that any collateral furnished will be applicable to all indebtedness due to such banks. Certain long-term loan agreements provide that lenders may request the Group to submit proposals to pay dividends for approval. The Group has never received such a request from any of their lenders. 6. Retirement benefits The Company and certain subsidiaries have unfunded retirement plans covering substantially all of their employees. Under the unfunded retirement plans, employees terminating their employment are entitled, in most circumstances, to lump-sum severance payments determined by reference to the rate of pay at time of termination, years of service and certain other factors. The liability for retirement benefits for 2008 and 2007 included 244 million ($2,308 thousand) and 356 million, respectively, for retirement benefits of directors and corporate auditors. The liability for employees retirement benefits at May 31, 2008 and 2007 consisted of the following: Projected benefit obligation... 3,793 3,754 $35,867 Unrecognized actuarial loss... (97) (117) (917) Net liability... 3,696 3,637 $34,950 The components of net periodic benefit costs for the years ended May 31, 2008 and 2007 are as follows: Service cost $2,118 Interest cost Recognized actuarial loss Payment to defined contribution pension plan ,343 Net periodic benefit costs $4,444 Assumptions used for the years ended May 31, 2008 and 2007 are set forth as follows: Discount rate % 2.5% Recognition period of actuarial gain/loss years 10 years 7. Equity Since May 1, 2006, Japanese companies have been subject to the Corporate Law of Japan (the Corporate Law ), which reformed and replaced the Commercial Code of Japan. The significant provisions in the Corporate Law that affect financial and accounting matters are summarized below: (a) Dividends Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. However, the Company cannot do so because it does not meet all the above criteria. The Corporate Law permits companies to distribute dividends-inkind (non-cash assets) to shareholders subject to a certain limitation and additional requirements. Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than 3 million. (b) Increases/decreases and transfer of common stock, reserve and surplus The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law 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 shareholders. (c) Treasury stock and treasury stock acquisition rights The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by specific formula. Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are 13

15 now presented as a separate component of equity. The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights. 8. Income taxes The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 40.7% for the years ended May 31, 2008 and The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at May 31, 2008 and 2007 are as follows: Deferred tax assets: Allowance for doubtful receivables and accounts $ 1,182 Liabilities for retirement benefits... 1,600 1,620 15,130 Tax loss carryforwards ,298 Investment securities ,281 Other ,128 Less valuation allowance... (1,148) (870) (10,856) Total deferred tax assets... 2,238 2,324 $21,163 Deferred tax liabilities: Retained earnings appropriated for tax allowable reserves Net unrealized gain on available-for-sale securities ,944 $ 9,144 Other Total deferred tax liabilities ,955 $ 9,191 Net deferred tax assets... 1, $12,199 Net deferred tax liabilities $ 227 At May 31, 2008, certain subsidiaries have tax loss carryforwards aggregating approximately 1,994 million ($18,856 thousand) which are available to be offset against taxable income of such subsidiaries in future years. These tax loss carryforwards, if not utilized, will expire as follows: Year Ending May $ , , Thereafter... 1,303 12,321 Total... 1,744 $16,492 A reconciliation between the normal effective statutory tax rate and the actual effective tax rates reflected in the accompanying consolidated statements of income for the years ended May 31, 2008 and 2007 is as follows: Normal effective statutory tax rate % 40.7% Change in valuation allowance (70.7) Equity in losses of unconsolidated subsidiaries and affiliates Expenses not deductible for income tax purposes Per capita levy Difference of tax rates for foreign subsidiaries... (0.3) 1.7 R&D tax credit... (0.9) (0.9) Reversal of land revaluation... (4.1) The prior years income taxes Other net... (2.4) (1.5) Actual effective tax rates % (21.6)% 9. Research and development costs Research and development costs charged to income were 250 million ($2,364 thousand) and 275 million for the years ended May 31, 2008 and 2007, respectively. 10. Leases The Group leases certain machinery and equipment. Total lease payments under finance leases that are not deemed to transfer ownership of the leased property to the lessee are 55 million ($520 thousand) and 71 million for the years ended May 31, 2008 and 2007, respectively. Pro forma information on an as if capitalized basis for leased property under finance leases that do not transfer ownership of the leased property to the lessee as of May 31, 2008 and 2007 is as follows: Machinery and equipment: Acquisition cost $2,364 Accumulated depreciation... (114) (63) (1,078) Net leased property $1,286 Obligations under finance leases as of May 31, 2008 and 2007: Due within one year $ 586 Due after one year Total $1,286 The amounts of acquisition cost and obligations under finance leases includes the imputed interest expense portion. The minimum rental commitments under noncancellable operating leases at May 31, 2008 were as follows: Due within one year $1,210 Due after one year ,773 Total $8,983 14

16 Depreciation expense, which is not reflected in the accompanying consolidated statements of income, computed by the straight-line method, was 55 million ($520 thousand) and 71 million for the years ended May 31, 2008 and 2007, respectively. 11. Derivatives The Group enters into derivative financial instrument contracts, in the normal course of business, to reduce the exposure to fluctuations in interest rates and foreign exchange rates. The Group has utilized interest rate swaps to decrease interest expense on long-term debt. The Group also enters into foreign exchange forward contracts to hedge market risk from changes in foreign exchange rates associated with assets and liabilities denominated in foreign currencies. The Group does not hold or issue derivatives for trading purposes. Subsidiaries do not enter into derivatives. Because the counterparties to these derivatives are limited to major financial institutions, the Group does not anticipate any losses arising from credit risk. The basic policies for the use of derivatives are approved by the Board of Directors and the execution and control of derivatives are controlled by the Finance Department. Each derivative transaction is reported to the Accounting Department. Derivative financial instruments which qualify for hedge accounting for the years ended May 31, 2008 and 2007, are not subject to the disclosure of market value information. 12. Contingent liabilities Contingent liabilities at May 31, 2008 were as follows: Employees housing loans guaranteed... 5 $ Subsequent event The following appropriations of retained earnings at May 31, 2008 were approved at the Company s shareholders meeting held on August 28, 2008: Year-end cash dividends, 2.5 ($0.02) per share $1, Segment information Information about industry segments, geographical segments and sales to foreign customers of the Company and subsidiaries for the years ended May 31, 2008 and 2007, is as follows: (1) Industry Segments a. Sales and Operating Income Automotive textile and traffic facilities Millions of Yen 2008 Eliminations/ corporate Interior fittings Others Consolidated Sales to customers... 37,864 38,098 4,907 80,869 Intersegment sales (242) Total sales... 37,931 38,115 5,065 (242) 80,869 Operating expenses... 36,884 35,540 4,854 1,289 78,567 Operating income... 1,047 2, (1,531) 2,302 b. Total Assets, Depreciation, Impairment Loss and Capital Expenditures Automotive textile and traffic facilities Millions of Yen 2008 Eliminations/ corporate Interior fittings Others Consolidated Total assets... 26,340 26,885 3,819 22,892 79,936 Depreciation ,193 Impairment loss Capital expenditures , ,014 15

17 a. Sales and Operating Income Automotive textile and traffic facilities Millions of Yen 2007 Eliminations/ corporate Interior fittings Others Consolidated Sales to customers... 37,586 34,083 5,001 76,670 Intersegment sales (283) Total sales... 37,667 34,099 5,187 (283) 76,670 Operating expenses... 36,615 31,836 4,951 1,243 74,645 Operating income... 1,052 2, (1,526) 2,025 b. Total Assets, Depreciation and Capital Expenditures Automotive textile and traffic facilities Millions of Yen 2007 Eliminations/ corporate Interior fittings Others Consolidated Total assets... 26,375 24,181 3,970 22,651 77,177 Depreciation Capital expenditures , ,014 a. Sales and Operating Income Automotive textile and traffic facilities U.S. Dollars 2008 Eliminations/ corporate Interior fittings Others Consolidated Sales to customers... $358,052 $360,265 $46,402 $764,719 Intersegment sales ,494 $ (2,289) Total sales , ,426 47,896 (2,289) 764,719 Operating expenses , ,076 45,901 12, ,951 Operating income... $ 9,901 $ 24,350 $ 1,995 $(14,478) $ 21,768 b. Total Assets, Depreciation, Impairment Loss and Capital Expenditures Automotive textile and traffic facilities U.S. Dollars 2008 Eliminations/ corporate Interior fittings Others Consolidated Total assets... $249,078 $254,232 $36,113 $216,473 $755,896 Depreciation... 3,688 5,721 1, ,281 Impairment loss Capital expenditures... 5,797 10,884 2, ,045 (2) Geographical Segments Under Japanese accounting regulations, the Group is not required to disclose geographical segment information because sales and total assets in Japan represented more than 90% of those of the Group for the years presented herein. (3) Sales to Foreign Customers Under Japanese accounting regulations, the Group is not required to disclose sales to foreign customers information because sales to foreign customers represented less than 10% of those of the Group for the years presented herein. 16

18 INDEPENDENT AUDITORS REPORT Deloitte Touche Tohmatsu Yodoyabashi Mitsui Building 4-1-1, Imabashi, Chuo-ku Osaka-shi, Osaka Japan Tel: Fax: To the Board of Directors of Suminoe Textile Co., Ltd.: We have audited the accompanying consolidated balance sheets of Suminoe Textile Co., Ltd. and subsidiaries as of May 31, 2008 and 2007, and the related consolidated statements of income, changes in equity, and cash flows for the years then ended, all expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Suminoe Textile Co., Ltd. and subsidiaries as of May 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan. Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan. August 28,

19 CORPORATE DIRECTORY BOARD OF DIRECTORS AND CORPORATE AUDITORS (as of August 28, 2008) President Ichizo Yoshikawa (Representative Director) Managing Directors Makoto Odajima (Representative Director) Syun Hayashi Directors Shinji Yoshida Toshikazu Masukawa Noboru Ogawa Kenji Sukino Yoshiaki Tanihara Shozo Kawabata Yasuaki Kitano Hitoshi Iida Corporate Auditors Ken-ichi Yamagata Satoshi Adachi Isao Yamabe INVESTOR INFORMATION (as of May 31, 2008) Year of Establishment: 1883 Paid-in Capital Stock: 9,554,173,950 Authorized Shares: 300,000,000 shares Major Shareholders: Issued Shares: 76,821,626 shares Shareholders: 5,073 Employees: 396 Takashimaya Company, Limited Nippon Life Insurance Company Marubeni Corporation The Master Trust Bank of Japan, Ltd. (Trust account) Mizuho Corporate Bank, Ltd. TOYOTA MOTOR CORPORATION The Master Trust Bank of Japan Ltd. (as trustee for Retirement Benefit Trust of UNITIKA LTD.) The Bank of Tokyo-Mitsubishi UFJ, Ltd. NikkoCiti Trust and Banking Corporation (Investment account) Suminoe Textile s Employees Association CORPORATE DATA (as of May 31, 2008) Subsidiaries Suminoe Co., Ltd. Runon Co., Ltd. Marunaka Souei Co., Ltd. Suminoe Works Co., Ltd. Suminoe Logistics Co., Ltd. Sewing Hyogo Co., Ltd. Tango Textile Co., Ltd. Suminoe Koka Co., Ltd. Suminoe Nara Co., Ltd. Suminoe Textile of America Corp. Suzhou Suminoe Textiles Co., Ltd. SPM Automotive Textile Co., Ltd. Kansai Laboratory Co., Ltd. Degora Trading Co., Ltd. Many Able Co., Ltd. Associated Companies T.C.H. Suminoe Co., Ltd. K s Tec Co., Ltd. KST Co., Ltd. Suzhou Suminoe Koide Automotive Accessories Co., Ltd. PT Sinar Suminoe Indonesia Sumisho Airbag Systems Co., Ltd. Offices Head Office, Osaka Branch & Osaka Showroom 11-20, Minami-Semba 3-Chome, Chuo-ku, Osaka Phone: Fax: Tokyo Branch & Tokyo Showroom BR Gotanda-Building, 30-4, Nishi-Gotanda 2-Chome, Shinagawa-ku, Tokyo Phone: Fax: Sales Offices Sapporo, Sendai, Kita-kanto, Chiba, Yokohama, Shizuoka, Kanazawa, Nagoya, Kyoto, Kobe, Okayama, Hiroshima, Fukuoka, Kagoshima Factories Nara, Osaka, Shiga, Kyoto R&D Center 5-8, Obori 1-Chome, Matsubara, Osaka Phone: Fax:

20 SUMINOE TEXTILE CO., LTD. Head Office 11-20, Minami-Semba 3-Chome, Chuo-ku, Osaka , Japan Phone: Fax: URL: Printed in Japan