Income Analysis
During the year under review, the Japanese economy underwent a mild recovery due to the positive effects of the govenment's large-scale economic stimulus measures that continued through the middle of the fiscal year, historically low interest rates, and a downward adjustment in the value the yen. These factors notwithstanding, a full-scale economic recovery failed to materialize.
Amid this environment, despite lower sales in the Electronics and Information Sector, the Company posted a 3.8% increase in consolidated net sales, to 1,533.5 billion yen, thanks to growth in revenues in the Iron and Steel and Machinery sectors. Reflecting such factors as a sharp decline in income in the Electronics and Information Sector, operating income fell 29.0%, to 97.5 billon yen, leading to a decline in the operating margin to 6.4%, from 9.3% in the prior year.
Sales in the Iron and Steel Sector rose 7.3%, to 564.5 billion yen. However, operating income declined 4.0%, to 53.1 billion yen.
In the Aluminum and Copper Sector, sales advanced 6.0%, to 336.5 billion yen. On the other hand, operating income fell 12.2%, to 20.4 billion yen. This decrease was due to a decline in roll margins.
Sales in the Machinery Sector were up 12.3%, to 520.7 billion yen. However, operating income dropped 16.7%, to 30.5 billion yen, which reflected a decline in overall profitability accompanying intensifying competition.
In the Electronics and Information Sector, sales plunged 35.2%, to 76.3 billion yen, and an operating loss of 10.0 billion yen was recorded. This unfavorable performance is attributable to deteriorating profitability of semiconductor-related products occurring with the sudden collapse of prices for DRAMs.
Sales from other business activities rose 4.7%, to 105.0 billion yen. However, operating income fell 23.5%, to 6.7 billion yen, because of a decline in profitability.
On the other hand, net other expenses totaled 76.6 billion yen, and income before income taxes amounted to 21.0 billion yen. After adjustments for income taxes, minority interests, and investment gains and losses based on the equity method, net income amounted to 17.5 billion yen.

Analysis of Cash Flow and Financial Position
The Company's operating, investing, and financing activities during the year resulted in a 20.2% net decrease in cash and cash equivalents, to 61.5 billion yen.
Net cash provided by operating activities amounted to 67.6 billion yen, down from 116.0 billion yen in the previous year.
During the fiscal year, the Company allocated 132.2 billion yen for the purchase of property, plant and equipment, and 49.1 billion yen for the purchase of marketable securities, investments, and other assets. On the other hand, the Company posted a 35.5 billion yen inflow from the sale of plant and equipment and a 25.7 billion yen inflow from the sale of marketable securities, investments, and other assets. As a result, net cash used in investing activities totaled 120.0 billion yen.
Net cash provided by financing activities amounted to 36.8 billion yen, compared with 171.8 billion yen in net cash used in financing activities in the previous fiscal year. During the fiscal year, the Company procured 152.1 billion yen through the issuance of long-term debt and corporate bonds. The Company also procured 77.8 billion yen from short-term borrowings. On the other hand, the Company repaid 193.1 billion yen in long-term debt and the redemption of bonds.
Total assets at March 31, 1997 amounted to 2,338.1 billion yen, 1.4% lower than at the end of the previous fiscal year-end. Total stockholders' equity at fiscal year- end was 370.3 billion yen, up 5.1%. As a result, the net worth ratio was 15.8%.