UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 6-K

COMMISSION FILE NUMBER: 1-7239

KOMATSU LTD.

Translation of registrant’s name into English

3-6 Akasaka 2-chome, Minato-ku, Tokyo, Japan
Address of principal executive office

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F þ      Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o      No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______

 

 

INFORMATION TO BE INCLUDED IN REPORT

1.

Quarterly Report for the First Quarter of the 142nd Fiscal Year filed on August 11, 2010

On August 11, 2010, the registrant filed its Quarterly Report (Shihanki Houkokusho) with the Director of the Kanto Local Finance Bureau of Japan pursuant to the Financial Instruments and Exchange Act of Japan. This Quarterly Report contains, among other information, Quarterly Consolidated Financial Statements for the three months period ended June 30, 2010.

Material information in the report, other than the Quarterly Consolidated Financial Statements, has already been reported by the registrant in its press release dated July 28, 2010, a copy of which was submitted under cover of Form 6-K on July 29, 2010 by the registrant.

Attached is an English translation of the registrant’s Quarterly Consolidated Financial Statements for the three months ended June 30, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

[Quarterly Consolidated Financial Statements]

Consolidated Balance Sheets (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries
June 30, 2010 and March 31, 2010

		June 30, 2010								March 31, 2010
						Component								Component
		Millions of yen				ratio (%)				Millions of yen				ratio (%)
Assets
Current assets
Cash and cash equivalents		¥	84,329							¥	82,429
Time deposits			2,087								1,132
Trade notes and accounts receivable, less allowance for doubtful receivables of ¥14,666 million at June 30, 2010 and ¥14,941 million at March 31, 2010			426,152								447,693
Inventories (Note 3)			378,691								396,416
Deferred income taxes and other current assets (Notes 8, 9 and 10)			122,549								112,451
Total current assets			1,013,808				53.3				1,040,121				53.1
Long-term trade receivables			157,560				8.3				150,972				7.7
Investments
Investments in and advances to affiliated companies			23,263								24,002
Investment securities (Notes 4, 9 and 10)			54,482								60,467
Other			2,121								2,399
Total investments			79,866				4.2				86,868				4.4
Property, plant and equipment — less accumulated depreciation of ¥620,892 million at June 30, 2010 and ¥631,973 million at March 31, 2010			504,058				26.5				525,100				26.8
Goodwill			28,697				1.5				29,570				15
Other intangible assets			59,851				3.1				61,729				32
Deferred income taxes and other assets (Notes 8, 9 and 10)			59,323				3.1				64,695				33
		¥	1,903,163				100.0			¥	1,959,055				100.0

The accompanying Notes to Quarterly Consolidated Financial Statements are an integral part of these balance sheets.

		June 30, 2010								March 31, 2010
						Component								Component
		Millions of yen				ratio (%)				Millions of yen				ratio (%)
Liabilities and Equity
Current liabilities
Short-term debt		¥	97,478							¥	123,438
Current maturities of long-term debt (Note 9)			111,160								105,956
Trade notes, bills and accounts payable			229,918								207,024
Income taxes payable			12,881								22,004
Deferred income taxes and other current liabilities (Notes 8, 9 and 10)			166,062								183,324
Total current liabilities			617,499				32.5				641,746				32.7
Long-term liabilities
Long-term debt (Notes 9 and 10)			346,873								356,985
Liability for pension and retirement benefits			42,260								46,354
Deferred income taxes and other liabilities (Notes 8, 9 and 10)			35,764								37,171
Total long-term liabilities			424,897				22.3				440,510				22.5
Total liabilities			1,042,396				54.8				1,082,256				55.2
Commitments and contingent liabilities (Note 7)			—								—
Equity
Komatsu Ltd. shareholders’ equity
Common stock:
Authorized 3,955,000,000 shares at June 30, 2010 and at March 31, 2010
Issued 998,744,060 shares at June 30, 2010 and at March 31, 2010			67,870								67,870
Outstanding 967,746,557 shares at June 30, 2010 and 968,039,976 shares at March 31, 2010
Capital surplus			140,421								140,421
Retained earnings:
Appropriated for legal reserve			32,726								31,983
Unappropriated			746,295								724,090
Accumulated other comprehensive income (loss) (Note 4)			(133,506	)							(95,634	)
Treasury stock at cost, 30,997,503 shares at June 30, 2010 and 30,704,084 shares at March 31, 2010			(35,300	)							(34,755	)
Total Komatsu Ltd. shareholders’ equity			818,506				43.0				833,975				42.6
Noncontrolling interests			42,261				2.2				42,824				2.2
Total equity			860,767				45.2				876,799				44.8
		¥	1,903,163				100.0			¥	1,959,055				100.0

The accompanying Notes to Quarterly Consolidated Financial Statements are an integral part of these balance sheets.

Consolidated Statements of Income (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries
Three months ended June 30, 2010 and 2009

		Three months ended								Three months ended
		June 30, 2010								June 30, 2009
						Component								Component
		Millions of yen				ratio (%)				Millions of yen				ratio (%)
Net sales		¥	447,140				100.0			¥	320,428				100.0
Cost of sales			329,856				73.8				252,473				78.8
Selling, general and administrative expenses (Note 5)			62,947				14.1				59,486				18.6
Other operating income (expenses), net			(262	)			(0.1	)			(196	)			(0.1	)
Operating income			54,075				12.1				8,273				2.6
Other income (expenses), net			(3,971	)							455
Interest and dividend income			1,021				0.2				1,859				0.6
Interest expense			(1,669	)			(0.4	)			(2,731	)			(0.9	)
Other, net (Notes 4, 8 and 10)			(3,323	)			(0.7	)			1,327				0.4
Income before income taxes and equity in earnings of affiliated companies			50,104				11.2				8,728				2.7
Income taxes
Current			9,158								7,716
Deferred			8,308								(5,535	)
Total			17,466				3.9				2,181				0.7
Income before equity in earnings of affiliated companies			32,638				7.3				6,547				2.0
Equity in earnings of affiliated companies			641				0.1				(101	)			(0.0	)
Net income			33,279				7.4				6,446				2.0
Less net income attributable to noncontrolling interests			(2,582	)			(0.6	)			(1,683	)			(0.5	)
Net income attributable to Komatsu Ltd.		¥	30,697				6.9			¥	4,763				1.5

		Yen
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Net income attributable to Komatsu Ltd. per share (Note 6)
Basic		¥	31.72			¥	4.92
Diluted			31.70				4.92
Cash dividends per share (Note 12)			8.00				18.00

The accompanying Notes to Quarterly Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Equity (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries

Three months ended June 30, 2010		Millions of yen

										Retained earnings								Accumulated								Total
										Appropriated								other								Komatsu Ltd.
		Common				Capital				for legal								comprehensive				Treasury				shareholders’				Noncontrolling				Total
		stock				surplus				reserve				Unappropriated				income (loss)				stock				equity				interests				equity
Balance at March 31, 2010		¥	67,870			¥	140,421			¥	31,983			¥	724,090			¥	(95,634	)		¥	(34,755	)		¥	833,975			¥	42,824			¥	876,799
Cash dividends (Note 12)															(7,749	)											(7,749	)			(102	)			(7,851	)
Transfer to retained earnings appropriated for legal reserve											743				(743	)											—								—
Other changes																											—				—				—
Comprehensive income(loss)
Net income															30,697												30,697				2,582				33,279
Other comprehensive income(loss), for the period, net of tax
Foreign currency translation adjustments																			(35,245	)							(35,245	)			(2,983	)			(38,228	)
Net unrealized holding gains (losses) on securities available for sale (Note 8)																			(3,350	)							(3,350	)			—				(3,350	)
Pension liability adjustments																			(215	)							(215	)			—				(215	)
Net unrealized holding gains (losses) on derivative instruments																			938								938				(60	)			878
Comprehensive income (loss)																											(7,175	)			(461	)			(7,636	)
Purchase of treasury stock																							(545	)			(545	)							(545	)
Sales of treasury stock																							—				—								—
Balance at June 30, 2010		¥	67,870			¥	140,421			¥	32,726			¥	746,295			¥	(133,506	)		¥	(35,300	)		¥	818,506			¥	42,261			¥	860,767

Three months ended June 30, 2009		Millions of yen

										Retained earnings								Accumulated								Total
										Appropriated								other								Komatsu Ltd.
		Common				Capital				for legal								comprehensive				Treasury				shareholders’				Noncontrolling				Total
		stock				surplus				reserve				Unappropriated				income (loss)				stock				equity				interests				equity
Balance at March 31, 2009		¥	67,870			¥	140,092			¥	28,472			¥	719,222			¥	(105,744	)		¥	(34,971	)		¥	814,941			¥	33,393			¥	848,334
Cash dividends															(17,431	)											(17,431	)			(300	)			(17,731	)
Transfer to retained earnings appropriated for legal reserve											2,309				(2,309	)											—								—
Other changes																											—				1,753				1,753
Comprehensive income(loss)
Net income															4,763												4,763				1,683				6,446
Other comprehensive income(loss), for the period, net of tax
Foreign currency translation adjustments																			7,131								7,131				1,590				8,721
Net unrealized holding gains (losses) on securities available for sale (Note 8)																			3,477								3,477				—				3,477
Pension liability adjustments																			1,323								1,323				—				1,323
Net unrealized holding gains (losses) on derivative instruments																			28								28				254				282
Comprehensive income(loss)																											16,722				3,527				20,249
Purchase of treasury stock																							(7	)			(7	)							(7	)
Sales of treasury stock							(98	)															206				108								108
Balance at June 30, 2009		¥	67,870			¥	139,994			¥	30,781			¥	704,245			¥	(93,785	)		¥	(34,772	)		¥	814,333			¥	38,373			¥	852,706

The accompanying Notes to Quarterly Consolidated Financial Statements are an integral part of these statements.

Consolidated Statements of Cash Flows (Unaudited)

Komatsu Ltd. and Consolidated Subsidiaries
Three months ended June 30, 2010 and 2009

		Millions of yen
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Operating activities
Net income		¥	33,279			¥	6,446
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			21,433				22,003
Deferred income taxes			8,308				(5,535	)
Net loss (gain) from sale of investment securities and subsidiaries			33				65
Net loss (gain) on sale of property			(585	)			(95	)
Loss on disposal of fixed assets			457				396
Pension and retirement benefits, net			(3,074	)			(1,290	)
Changes in assets and liabilities:
Decrease (increase) in trade receivables			(15,202	)			7,327
Decrease (increase) in inventories			(4,336	)			32,124
Increase (decrease) in trade payables			32,280				(46,896	)
Increase (decrease) in income taxes payable			(8,086	)			(2,373	)
Other, net			(9,261	)			(11,265	)
Net cash provided by (used in) operating activities			55,246				907
Investing activities
Capital expenditures			(18,829	)			(24,927	)
Proceeds from sale of property			2,043				5,342
Proceeds from sale of available for sale investment securities			2				73
Purchases of available for sale investment securities			(536	)			(1,500	)
Acquisition of subsidiaries and equity investees, net of cash acquired			762				1,153
Collection of loan receivables			305				353
Disbursement of loan receivables			(27	)			(677	)
Decrease (increase) in time deposits			(935	)			(88	)
Net cash provided by (used in) investing activities			(17,215	)			(20,271	)
Financing activities
Proceeds from long-term debt			17,893				55,954
Repayments on long-term debt			(5,367	)			(7,207	)
Increase (decrease) in short-term debt, net			(25,478	)			(6,217	)
Repayments of capital lease obligations			(9,977	)			(9,430	)
Sale (purchase) of treasury stock, net			(6	)			101
Dividends paid			(7,749	)			(17,431	)
Other, net			(133	)			(1,117	)
Net cash provided by (used in) financing activities			(30,817	)			14,653
Effect of exchange rate change on cash and cash equivalents			(5,314	)			310
Net increase (decrease) in cash and cash equivalents			1,900				(4,401	)
Cash and cash equivalents, beginning of year			82,429				90,563
Cash and cash equivalents, end of period		¥	84,329			¥	86,162

The accompanying Notes to Quarterly Consolidated Financial Statements are an integral part of these statements.

Notes to Quarterly Consolidated Financial Statements (Unaudited)

1. Basis of Quarterly Financial Statement Presentation and Summary of Significant Accounting Policies

Basis of Quarterly Financial Statement Presentation

Komatsu Ltd. (“Company”) and consolidated subsidiaries (together “Komatsu”) prepare and present the accompanying quarterly consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Summary of Significant Accounting Policies

There is no material change for Summary of Significant Accounting Policies stated in annual report for the year ended March 31, 2010.

2. Supplemental Cash Flow Information

Additional cash flow information and noncash investing and financing activities for the three months ended June 30, 2010 and 2009 are as follows:

		Millions of yen
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Additional cash flow information:
Interest paid		¥	1,628			¥	2,752
Income taxes paid			20,301				10,694
Noncash investing and financing activities:
Capital lease obligations incurred		¥	1,177			¥	4,273

3. Inventories

At June 30, 2010 and at March 31, 2010, inventories comprised the following:

		Millions of yen
		June 30,				March 31,
		2010				2010
Finished products, including finished parts held for sale		¥	234,524			¥	254,157
Work in process			108,307				102,096
Materials and supplies			35,860				40,163
Total		¥	378,691			¥	396,416

4. Investment Securities

Investment securities at June 30, 2010 and at March 31, 2010 primarily consisted of securities available for sale.

The cost, gross unrealized holding gains and losses, and fair value for such investment securities by major security types at June 30, 2010 and at March 31, 2010 are as follows:

		Millions of yen
						Gross unrealized holding
		Cost				Gains				Losses				Fair value
June 30, 2010
Investment securities:
Marketable equity securities available for sale		¥	24,969			¥	16,775			¥	164			¥	41,580
Other investment securities at cost			12,902
		¥	37,871

		Millions of yen
						Gross unrealized holding
		Cost				Gains				Losses				Fair value
March 31, 2010
Investment securities:
Marketable equity securities available for sale		¥	24,988			¥	22,235			¥	45			¥	47,178
Other investment securities at cost			13,289
		¥	38,277

Other investment securities primarily include non-marketable equity securities. The fair value of other investment securities was not estimated as it was not practicable to estimate the fair value of investments and no significant events or changes that might have effected the fair value of those investments were observed.

Unrealized holding gains and losses are included as a component of accumulated other comprehensive income (loss) until realized.

Proceeds from the sales of investment securities available for sale were ¥2 million and ¥73 million for the three months ended June 30, 2010 and 2009, respectively.

Impairment losses and net realized gains or losses from sale of investment securities available for sale during the three months ended June 30, 2010 and 2009 amounted to losses of ¥33 million and losses of ¥65 million, respectively. Such gains and losses were included in other income (expenses), net in the accompanying consolidated statements of income.

The cost of the investment securities sold was computed based on the average-cost method.

5. Stock Option Plan

The Company intends to transfer treasury shares to directors and certain employees and certain directors of subsidiaries and affiliated companies under an agreement granting the right for them to request such transfers at a predetermined price.

Komatsu recognizes compensation expense using the fair value method. For the three months ended June 30, 2010 and 2009, no compensation expense was recorded as no right was granted.

6. Net Income Attributable to Komatsu Ltd. per Share

A reconciliation of the numerators and denominators of the basic and diluted net income attributable to Komatsu Ltd. per share computations is as follows:

		Millions of yen
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Net income attributable to Komatsu Ltd.		¥	30,697			¥	4,763

		Number of shares
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Weighted average common shares outstanding, less treasury stock			967,834,078				967,910,177
Dilutive effect of:
Stock options			462,103				343,666
Weighted average diluted common shares outstanding			968,296,181				968,253,843

		Yen
		Three months ended				Three months ended
		June 30, 2010				June 30, 2009
Net income attributable to Komatsu Ltd.:
Basic		¥	31.72			¥	4.92
Diluted		¥	31.70			¥	4.92

7. Contingent Liabilities

At June 30, 2010 and at March 31, 2010, Komatsu was contingently liable for discounted and transferred receivables on a recourse basis with the financial institutions of ¥4,642 million and ¥9,850 million, respectively.

Komatsu provides guarantees to third parties of loans of the employees, affiliated companies and other companies. The guarantees relating to the employees are mainly made for their housing loans. The guarantees of loans relating to the affiliated companies and other companies are made to enhance the credit of those companies.

For each guarantee provided, Komatsu would have to perform under a guarantee, if the borrower defaults on a payment within the contract terms. The contract terms are from 10 years to 30 years in the case of employees with housing loans, and from 1 year to 10 years in the case of loans relating to the affiliated companies and other companies. The maximum amount of undiscounted payments Komatsu would have had to make in the event of default was ¥93,949 million and ¥88,379 million at June 30, 2010 and at March 31, 2010, respectively. The fair value of the liabilities recognized for Komatsu’s obligations as guarantors under those guarantees at June 30, 2010 was insignificant. Certain of those guarantees were secured by collateral and insurance issued to Komatsu.

Management of Komatsu believes that losses from those contingent liabilities, if any, would not have a material effect on the consolidated financial statements.

Komatsu is involved in certain legal actions and claims arising in the ordinary course of its business. It is the opinion of management and legal counsel that such litigation and claims will be resolved without material effect on Komatsu’s financial statements.

Komatsu has business activities with customers, dealers and associates around the world and its trade receivables from such parties are well diversified to minimize concentrations of credit risks. Management does not anticipate incurring losses on its trade receivables in excess of established allowances.

8. Derivative Financial Instruments

Notional principal amounts of derivative financial instruments outstanding at June 30, 2010 and at March 31, 2010 are as follows:

		Millions of yen
		June 30,				March 31,
		2010				2010
Forwards and options:
Sale of foreign currencies		¥	73,504			¥	40,209
Purchase of foreign currencies			45,573				48,809
Option contracts (purchased)			301				949
Interest rate swaps, cross-currency swaps and interest rate cap agreements			181,532				184,487

Fair values of derivative instruments at June 30, 2010 and at March 31, 2010 on the consolidated balance sheets are as follows:

Millions of yen

June 30, 2010

Derivative Assets

Derivative Liabilities

Derivative instruments designated

Location on the consolidated

Estimated

Location on the consolidated

Estimated

as hedging instruments

Balance Sheets

fair value

Balance Sheets

fair value

Forwards contracts

Deferred income taxes and other current assets

¥

2,395

Deferred income taxes and other current liabilities

¥

2

Interest rate swaps, cross-currency swaps and interest rate cap agreements

Deferred income taxes and other current assets

84

Deferred income taxes and other current liabilities

771

Deferred income taxes and other assets

—

Deferred income taxes and other liabilities

—

Total

¥

2,479

¥

773

		Derivative Assets						Derivative Liabilities
Undesignated derivative		Location on the consolidated		Estimated				Location on the consolidated		Estimated
instruments		Balance Sheets		fair value				Balance Sheets		fair value
Forwards contracts		Deferred income taxes and other current assets		¥	939			Deferred income taxes and other current liabilities		¥	491
Option contracts		Deferred income taxes and other current assets			6			Deferred income taxes and other current liabilities			—
Interest rate swaps, cross-currency swaps and interest rate cap agreements		Deferred income taxes and other current assets			3,325			Deferred income taxes and other current liabilities			746
		Deferred income taxes and other assets			9,632			Deferred income taxes and other liabilities			950
Total				¥	13,902					¥	2,187
Total Derivative Instruments				¥	16,381					¥	2,960

Millions of yen

March 31, 2010

Derivative Assets

Derivative Liabilities

Derivative instruments designated

Location on the consolidated

Estimated

Location on the consolidated

Estimated

as hedging instruments

Balance Sheets

fair value

Balance Sheets

fair value

Forwards contracts

Deferred income taxes and other current assets

¥

73

Deferred income taxes and other current liabilities

¥

830

Interest rate swaps, cross-currency swaps and interest rate cap agreements

Deferred income taxes and other current assets

354

Deferred income taxes and other current liabilities

734

Deferred income taxes and other assets

99

Deferred income taxes and other liabilities

—

Total

¥

526

¥

1,564

		Derivative Assets						Derivative Liabilities
Undesignated derivative		Location on the consolidated		Estimated				Location on the consolidated		Estimated
instruments		Balance Sheets		fair value				Balance Sheets		fair value
Forwards contracts		Deferred income taxes and other current assets		¥	90			Deferred income taxes and other current liabilities		¥	1,248
Option contracts		Deferred income taxes and other current assets			18			Deferred income taxes and other current liabilities			—
Interest rate swaps, cross-currency swaps and interest rate cap agreements		Deferred income taxes and other current assets			1,730			Deferred income taxes and other current liabilities			915
		Deferred income taxes and other assets			6,989			Deferred income taxes and other liabilities			901
Total				¥	8,827					¥	3,064
Total Derivative Instruments				¥	9,353					¥	4,628

The effects of derivative instruments on the consolidated statements of income for the three months ended June 30, 2010 and 2009 are as follows:

Derivative instruments designated as fair value hedging relationships

Millions of yen

Three months ended

June 30, 2010

Location of

Amount of

Location of

Amount of

gains (losses)

gains (losses)

gains (losses)

gains (losses)

recognized in income

recognized in income

recognized in income

recognized in income

on derivatives

on derivatives

on hedged items

on hedged items

Interest rate swaps, cross-currency swaps and interest rate cap agreements

Other income (expenses), net: Other, net

¥

—

Other income (expenses), net: Other, net

¥

—

Total

¥

—

¥

—

Millions of yen

Three months ended

June 30, 2009

Location of

Amount of

Location of

Amount of

gains (losses)

gains (losses)

gains (losses)

gains (losses)

recognized in income

recognized in income

recognized in income

recognized in income

on derivatives

on derivatives

on hedged items

on hedged items

Interest rate swaps, cross-currency swaps and interest rate cap agreements

Other income (expenses), net: Other, net

¥

1,281

Other income (expenses), net: Other, net

¥

(1,398

)

Total

¥

1,281

¥

(1,398

)

Derivative instruments designated as cash flow hedging relationships

Millions of yen

Three months ended

June 30, 2010

Ineffective portion and amount excluded

Effective portion

from effectiveness testing

Amount of

Location of

Amount of

Location of

Amount of

gains (losses)

gains (losses)

gains (losses)

gains (losses)

gains (losses)

recognized in

reclassified

reclassified

recognized in

recognized in

OCI on

from accumulated

from accumulated

income

income

derivatives

OCI into income

OCI into income

on derivatives

on derivatives

Forwards contracts

¥

3,334

Other income (expenses), net: Other, net

¥

1,606

—

¥

—

Interest rate swaps, cross-currency swaps and interest rate cap agreements

(127

)

—

—

—

—

Total

¥

3,207

¥

1,606

¥

—

Millions of yen

Three months ended

June 30, 2009

Ineffective portion and amount excluded

Effective portion

from effectiveness testing

Amount of

Location of

Amount of

Location of

Amount of

gains (losses)

gains (losses)

gains (losses)

gains (losses)

gains (losses)

recognized in

reclassified

reclassified

recognized in

recognized in

OCI on

from accumulated

from accumulated

income

income

derivatives

OCI into income

OCI into income

on derivatives

on derivatives

Forwards contracts

¥

(734

)

Other income (expenses), net: Other, net

¥

(74

)

—

¥

—

Interest rate swaps, cross-currency swaps and interest rate cap agreements

(18

)

—

—

—

—

Total

¥

(752

)

¥

(74

)

¥

—

Derivative instruments not designated as hedging instruments relationships

		Millions of yen
		Three months ended
		June 30, 2010
		Location of gains (losses) recognized				Amount of gains (losses) recognized
		in income on derivatives				in income on derivatives
Forwards contracts		Other income (expenses), net: Other, net				¥	1,963
Option contracts		Other income (expenses), net: Other, net					(9	)
Interest rate swaps, cross-currency swaps and interest rate cap agreements		Cost of sales					(149	)
		Other income (expenses), net: Other, net					3,251
Total						¥	5,056

		Millions of yen
		Three months ended
		June 30, 2009
		Location of gains (losses) recognized				Amount of gains (losses) recognized
		in income on derivatives				in income on derivatives
Forwards contracts		Other income (expenses), net: Other, net				¥	(117	)
Option contracts		Other income (expenses), net: Other, net					4
Interest rate swaps, cross-currency swaps and interest rate cap agreements		Cost of sales					(82	)
		Other income (expenses), net: Other, net					(937	)
Total						¥	(1,132	)

9. The Fair Value of Financial Instruments

(1)

Cash and Cash Equivalents, Time Deposits, Trade Notes and Accounts Receivable, Other Current Assets, Short-Term Debt, Trade Notes, Bills and Accounts Payables, and Other Current Liabilities

The carrying amount approximates fair value because of the short maturity of these instruments.

(2)

Investment Securities, Marketable Equity Securities

The fair values of investment securities available for sale for which it is practicable to estimate fair value are based on quoted market prices and are recognized on the accompanying consolidated balance sheets.

(3)

Long-Term Trade Receivables, Including Current Portion

The fair values of long-term trade receivables are based on the present value of future cash flows through maturity, discounted using estimated current interest rates. The fair values computed on such a basis approximate the carrying amounts.

(4)

Long-Term Debt, Including Current Portion

The fair values of each of the long-term debts are based on the quoted price in the most active market or the present value of future cash flows associated with each instrument discounted using the current borrowing rate for similar debt of comparable maturity.

(5)

Derivatives

The fair values of derivative financial instruments, consisting principally of foreign exchange contracts and interest swaps agreements, are estimated by obtaining quotes from brokers and are recognized on the accompanying consolidated balance sheets.

The carrying amounts and the estimated fair values of the financial instruments, including financial instruments not qualifying as hedge, at June 30, 2010 and at March 31, 2010, are summarized as follows:

		Millions of yen
		June 30, 2010								March 31, 2010
		Carrying				Estimated				Carrying				Estimated
		amount				fair value				amount				fair value
Investment securities, marketable equity securities		¥	41,580			¥	41,580			¥	47,178			¥	47,178
Long-term debt, including current portion			458,033				456,313				462,941				460,916
Derivatives:
Forwards and options
Assets			3,340				3,340				181				181
Liabilities			493				493				2,078				2,078
Interest rate swaps, cross-currency swaps and interest rate cap agreements
Assets			13,041				13,041				9,172				9,172
Liabilities			2,467				2,467				2,550				2,550