2012Corporate Social Responsibility Report 2012

Issued in January 2012

As a printing process, waterless printing,which does not generate harmfulwaste water, is used.

Waterless PrintingVegetable oil ink is used in order to reducethe generation ofVOC (volatile organic compounds)that causes air pollution.

Vegetable Oil Ink UsedFSC Certified Paper UsedThis report is made by using paper made fromwood taken from forests appropriatelymanaged in accordance with the strict standard.

CSR Report

01

CSR as Conceived by OHARARealization of OHARA's philosophy based on our corporate principles

OHARA's philosophybased on our corporate principles

Disclosure ofinformation

Employee respect

Environmentalprotection

Harmony withsociety

Sincereactivities

Management Philosophy

Vision Statement

Triple Bottom Line(Environment, Society, Economy)

Management PhilosophyThe OHARA Group is honored to keep on creating unique and new values in order to establish a strong company structure for its employees' happiness and for the prosperity of the society.

Vision StatementWith high aspirations for contributing to the creation of the future for human and society through technological advances, we will provide high quality, cutting-edge materials for use in the optical, electronics, and environmental/energy fields worldwide. Working closely with our customers, we will constantly pursue innovation and become the "Dream Fulfillment Company".

OHARA's philosophy based on our corporate principles

Sincere activities（p.11-13）

Harmony with society（p.14-15）

Disclosure of information（p.16）

Environmental protection（p.17-22）

Employee respect（p.23-25）

Contents

CSR as Conceived by OHARA ……………… 01Editorial Policy ……………………………… 02Message from Top Management ………… 03

Feature

Toward the Long-term Vision 2020 ……… 05

OHARA in the Society　Optical Business ………………………… 08　Electronics Business……………………… 08　Environmental/Energy Business ……… 09

Toward the realization of OHARA'sphilosophy based on our corporate principlesSincere activities …………………………… 11Harmony with society ……………………… 14Disclosure of information ………………… 16Environmental protection ………………… 17Employee respect…………………………… 23

Corporate Profile …………………………… 26

Editorial PolicyThis report has been issued on an ongoing basis since 2006 (under the title of "Environmental and Social Report" until 2008) for the purpose of letting as many people as possible be aware of OHARA INC.'s activities regarding CSR.　The 2012 issue is organized in accordance with OHARA's Principle based on corporate philosophy in order to communicate what the Company values more deeply and clearly. We have also tried to provide specific descriptions of our activities in the current year in each section. Furthermore, this issue features a new medium-term management plan toward the long-term vision 2020, and presents OHARA's three core businesses in order to achieve the management plan. It is our pleasure if readers will come to find OHARA more familiar through reading this report.

Scope of ReportThis report focuses on the unconsolidated activities of OHARA INC. ＊The figures in the financial reports, however, denote the numbers that include the results of Group companies

Report PeriodFrom November 1, 2010 to October 31, 2011＊There are, however, some references to activities in fiscal 2012.

http://www.ohara-inc.co.jp/

Date of IssuanceJanuary 2012Previous issue: January 2011Next issue: expected to be January 2013

Reference GuidelinesGRI, Sustainability ReportingGuidelines Version 3.1Ministry of the Environment,Environmental Report Guideline2007 Version

InquiriesGeneral Affairs Section orEnvironmental Safety Section,General Affairs Department,OHARA INC. TEL：042-772-2101FAX：042-774-1071

We va lue trust above a l l e l se , and us ing our propr ie tary

h igh techno logy and advanced mater ia l s o f the best qua l i ty ,

we are ach iev ing innovat ion for the next generat ion and

str iv ing for fur ther deve lopment .

Creating the Future for People and Society

02

CSR as Conceived by OHARARealization of OHARA's philosophy based on our corporate principles

OHARA's philosophybased on our corporate principles

Disclosure ofinformation

Employee respect

Environmentalprotection

Harmony withsociety

Sincereactivities

Management Philosophy

Vision Statement

Triple Bottom Line(Environment, Society, Economy)

Management PhilosophyThe OHARA Group is honored to keep on creating unique and new values in order to establish a strong company structure for its employees' happiness and for the prosperity of the society.

Vision StatementWith high aspirations for contributing to the creation of the future for human and society through technological advances, we will provide high quality, cutting-edge materials for use in the optical, electronics, and environmental/energy fields worldwide. Working closely with our customers, we will constantly pursue innovation and become the "Dream Fulfillment Company".

OHARA's philosophy based on our corporate principles

Sincere activities（p.11-13）

Harmony with society（p.14-15）

Disclosure of information（p.16）

Environmental protection（p.17-22）

Employee respect（p.23-25）

Contents

CSR as Conceived by OHARA ……………… 01Editorial Policy ……………………………… 02Message from Top Management ………… 03

Feature

Toward the Long-term Vision 2020 ……… 05

OHARA in the Society　Optical Business ………………………… 08　Electronics Business……………………… 08　Environmental/Energy Business ……… 09

Toward the realization of OHARA'sphilosophy based on our corporate principlesSincere activities …………………………… 11Harmony with society ……………………… 14Disclosure of information ………………… 16Environmental protection ………………… 17Employee respect…………………………… 23

Corporate Profile …………………………… 26

Editorial PolicyThis report has been issued on an ongoing basis since 2006 (under the title of "Environmental and Social Report" until 2008) for the purpose of letting as many people as possible be aware of OHARA INC.'s activities regarding CSR.　The 2012 issue is organized in accordance with OHARA's Principle based on corporate philosophy in order to communicate what the Company values more deeply and clearly. We have also tried to provide specific descriptions of our activities in the current year in each section. Furthermore, this issue features a new medium-term management plan toward the long-term vision 2020, and presents OHARA's three core businesses in order to achieve the management plan. It is our pleasure if readers will come to find OHARA more familiar through reading this report.

Scope of ReportThis report focuses on the unconsolidated activities of OHARA INC. ＊The figures in the financial reports, however, denote the numbers that include the results of Group companies

Report PeriodFrom November 1, 2010 to October 31, 2011＊There are, however, some references to activities in fiscal 2012.

http://www.ohara-inc.co.jp/

Date of IssuanceJanuary 2012Previous issue: January 2011Next issue: expected to be January 2013

Reference GuidelinesGRI, Sustainability ReportingGuidelines Version 3.1Ministry of the Environment,Environmental Report Guideline2007 Version

InquiriesGeneral Affairs Section orEnvironmental Safety Section,General Affairs Department,OHARA INC. TEL：042-772-2101FAX：042-774-1071

We va lue trust above a l l e l se , and us ing our propr ie tary

h igh techno logy and advanced mater ia l s o f the best qua l i ty ,

we are ach iev ing innovat ion for the next generat ion and

str iv ing for fur ther deve lopment .

Creating the Future for People and Society

03

Message from Top Management

What is a noteworthy event in reaching the 76th anniversary since the foundation?

I express my heartfelt sympathy to victims of the Great East Japan Earthquake on March 11, 2011, and sincerely wish for the earliest restoration. Fortunately, OHARA and its domestic subsidiaries were spared personnel and property damages from the earthquake. However, interruption to power and gas supply and response to subsequent power conservation requirements had slightly adverse effects to our production systems. Furthermore, as our business partners in Tohoku and North Kanto areas were hit by the disaster, OHARA sent them relief goods such as drinking water, food and daily necessities. OHARA's business is the development and production of cutting-edge glass materials in "optical", "electronics" and "environmental/energy fields", which support products essential for modern abundant life.Therefore, even in times of emergency, it is very important to keep business at the usual level, and continue to supply products to

customers in a stable manner.To this end, OHARA enhanced "Manual for responding to disasters" in preparation for large scale natural disasters, in addition to the "business continuity plan" formulated in 2007. With this manual, the system was established to ensure the safety of employees who support OHARA's business, clarifying criteria of decision, procedures and a system of instructions and orders. In the new medium-term management plan, it has been stipulated to diversify risks and secure global competitiveness by establishing bases for melting glass in China and other Asian countries such as Taiwan and Malaysia, of which process had been concentrated in Sagamihara Plant. Regarding the disaster in March 2011 and subsequent significant environmental changes as a lesson, OHARA will be committed to meeting customers' expectation by establishing a stable glass supply system as responding to various risks.

Progressing, challenging, and fulfilling dreams with you,we aim to be a "Dream Fulfillment Company"

1

Pres ident

Hirokazu Saito

04

Could you tell us OHARA's point of view toward CSR?

Since starting business in 1935, OHARA has developed with the growth of the optical equipment industry up to the present as a maker capable to stably supply optical glass, a material supporting key industries, even with diverse environmental changes. In recent years, the Company has further progressed aiming at newly growing under the slogan of ""Dream Fulfillment Company"".The "Dream Fulfillment Company" indicates a company which always aims at achieving people's dreams and an abundant future society, leading technology with highest quality and advanced materials. To this end, OHARA has set up "OHARA's philosophy based on our corporate principles" including five elements, "sincere activities", "harmony with society", "disclosure of information", "environmental protection" and "employee respect". We consider that the goal of OHARA's CSR is to realize the philosophy, which would underlie corporate continuous development with a society. In order to enable OHARA to not only continuously develop through corporate activities, but also fulfill corporate social responsibility at the same time, it is necessary to have all stakeholders understand the concept of OHARA's CSR to work together with the goal of being a "Dream Fulfillment Company". As a part of communication therefore, we issued the CSR Report for this fiscal year. We will proactively transmit information in cooperation with other communication tools.

What kinds of approaches to CSR will you take under the new medium-term management plan?

In order to promote "Conversion of business structure" and "Building new drivers for growth" as a basic strategy of the new medium-term management plan, the key point would be approaches in the environmental/energy field, the third pillar of OHARA's business. The growth of businesses in this field directly leads to the realization of "environmental protection", one of elements in "OHARA's philosophy based on corporate principle". Accordingly, with high technological ability which has been cultivated in optical and electronics fields and spirits of innovation since its foundation, we will further enhance businesses in the environmental/energy field with an eye to sustainable social development. As stipulated in our "Long-term Vision 2020", human resource development is one of OHARA's important themes. Therefore, OHARA fosters personnel with noble aspirations and ability to act for reform by raising employee's awareness of CSR. Through the "employee respect", we will simultaneously aim to achieve "harmony with society", "sincere activities" and "disclosure of information" eventually. To be specific, we will continue to proactively held conduct cleanup campaigns and plant tours as a part of social action programs, as well as compliance seminars with an eye to raising employee's awareness.

Finally, could you convey a message tostakeholders?

The nature of OHARA's CSR is to achieve each element of OHARA's philosophy based on our corporate principles through OHARA's business activities in accordance with the basic strategy formulated in the new medium-term management plan, in order to attain the "Long-term Vision 2020". We intend to broadly respond to trust of stakeholders by taking initiative in embodying the vision to be a "Dream Fulfillment Company. Your continued understanding and support will be greatly appreciated.

In relation to the new medium-term management plan, could you tell us your important issues and key points of approaches?

For OHARA's sustainable development, as stipulated in the management philosophy, we have to make efforts for achieving a good balance between happiness of all employees of OHARA Group and social prosperity. The "Long-term Vision 2020" was formulated for this. In the "Long-term Vision 2020", "establishing new business", "adding higher value", "globalization" and "human resource development and organizational culture" are regarded as main themes. Under those themes, we will show our attitude to proactively contribute to an improvement in the global environment by newly launching environmental/energy business in addition to existing optical business and electronics business. We will also aim to be a "Dream Fulfillment Company" which takes actions toward the realization of people's dream and an abundant future society, taking initiative in technological innovation with the best quality and advanced materials. With the goal of achieving the "Long-term Vision 2020", OHARA has made efforts in accordance with the basic strategies of "reform of business frameworks", "enhancement of competitiveness in total cost" and "promotion of growth strategy", under the medium-term management plan (Phase I: from 101st to 103rd period). However, in order to deal with drastic changes in business conditions such as response to the worldwide recession triggered by Lehman's fall, subsequent rare earth issues, and handling rapidly advancing strong yen, "conversion of business structure" and "building a new driver for growth" have been raised as new basic strategies in the new medium-term management plan

2

3

4

5

(Phase II: from 104th to 106th period). Concretely, taking into account changes in business environment after the earthquake in March 2011, we will offset risks and enhance our global cost competitiveness by setting up a new overseas base for melting glass. Furthermore, we will build a metabolic system toward long-term corporate growth with establishment of new business and creation of more themes for commercialization, centering on an incubation center. Sharing the meaning of advance in those basic strategies, all employees of

OHARA Group will work together toward the future growth.

05

Toward the Long-term Vis ion 2020New Medium-term Management Plan (Phase II: from FY2012 to FY2014)

Things OHARA should change

Things OHARA should not change

A commitment to helpingbuild a better societyand the capabilityto execute reforms

Optical business Electronics businessAnd Making inroadsinto the third domain,

environmentand energy business

Pursuing cutting-edgematerials of the highest quality

From a Japanese companyto customers around the world

Human resourcedevelopment,

organization culture

Creation ofnew business

High value added Globalization

A company thatrealizes dreams,working closelywith our customers

andpursuing innovation

Reformingthe businessstructure

Pursuinga growthstrategy

Boostingtotal cost

competitiveness

PhaseⅠ2009－2011

PhaseⅡ2012－2014

Creatingnew growthdrivers

Globalization

Adding higher valueConstruction of new

business

Changingthe

business structure

There is things OHARA should change to put our activities so far on track for growth.In the new medium-term management plan (Phase II), two basic strategies have been raised, "conversion of business structure" and "building a new driver for growth".

"Management Philosophy" is OHARA's DNA, and the "Long-term Vision 2020" indicates a future ideal image that OHARA Group should realize. Those are our milestones shared as what we should not change.

Advance in basic strategies ofthe Medium-term Management Plan

Approach to achievingthe long-term vision 2020

Human resource development and organizational culture

In the new medium-term management plan corresponding to Phase II toward the long-term vision 2020, primary strategies for each business were decided as shown below.In order to achieve higher-value added products, diversification and globalization in a speedy manner, business resources are inten-sively devoted to the primary strategies

Long-Term Vision 2020

Financial TargetsBuilding a global optical glass production systemIn response to changes in the operating environment, the Company will set up a new glass dissolution base overseas .Enhancing global cost competitiveness

Restructuring the low Tg glass development, production, and sales systemsShorten periods for developing materials- Innovate production technologies- Expand the range of product types- Start operations in the downstream process, such as glass molding and lens polishing

Restructuring the glass disks for hard disks devices business- Launch products that will be compatible with the next-generation heat-assisted magnetic recording system.- Bolster the provision of solutions for processing technologies and the supply chain.

Restructuring the special glass business- Respond to high-precision exposure devices.- Focus on developing products for large products for uses in space and astronomical observation.- Expand sales of the world’s No. 1 zero-expansion material to enter the EUV market.

Developing new businesses Lithium ion battery business- Develop a solid electrolyte, a key component of the next-generation lithium battery- Contribute to the commercialization of next-generation batteries, including metal lithium batteries and all-solid lithium ion batteries

OtherDevelop environmentally friendly products featuring superb functionality(such as optical materials and photocatalyst materials for concentrating solar powergeneration systems).à Help usher in a new era in energy and the environment.

In order to accelerate movements from development to commercialization, a system of incubation (i.e., fostering business) is enhanced. Respectively in optical, electronics and environmental/energy businesses, new drivers for growth will be constructed by quickly hatching eggs of at t rac t ive bus inesses wh i ch a re bo rn i n t he development phase, and leading them to mass production and commercialization. To this end, we will vitalize three activities, "seeking customer's needs", "seeking seeds in OHARA Group" and "seeking connection and contact points between the customer's needs and seeds in OHARA.

50,000

Net sales（million yen）

Net sales

Ordinary profit

ROA (return on assets)

Rate of interest-bearing

liabilities to total assets

42 billion yen or more

4.7 billion yen or more

7.0% or more

15.0% or less

Optical businessElectronics businessOrdinary profit

Ordinary profit（million yen）

7,000

6,000

5,000

4,000

3,000

2,000

1,000

40,000

30,000

20,000

10,000

2012

25,00026,000

28,500

13,500

10,7007,600

［32,600］［36,700］

［42,000］

2,100

3,200

4,700

2013 2014

FY2014

0 0

The environment surrounding OHARA has drastically changed.In Japan where melting facilities are concentrated, it is necessary to respond to multiple risks such as prolonged strong yen, electric power issues, and skyrocketing rare earth prices.In the new medium-term management plan, regarding especially growing demand in Asia as a chance, we have shared awareness that it is important to make efforts for converting their momentum to resources of Group's growth power and competitiveness. We will reform our corporate structure to enable cont inuous development by proactively converting business structures and optimizing systems for development, production and sales.

06

Toward the Long-term Vis ion 2020New Medium-term Management Plan (Phase II: from FY2012 to FY2014)

Things OHARA should change

Things OHARA should not change

A commitment to helpingbuild a better societyand the capabilityto execute reforms

Optical business Electronics businessAnd Making inroadsinto the third domain,

environmentand energy business

Pursuing cutting-edgematerials of the highest quality

From a Japanese companyto customers around the world

Human resourcedevelopment,

organization culture

Creation ofnew business

High value added Globalization

A company thatrealizes dreams,working closelywith our customers

andpursuing innovation

Reformingthe businessstructure

Pursuinga growthstrategy

Boostingtotal cost

competitiveness

PhaseⅠ2009－2011

PhaseⅡ2012－2014

Creatingnew growthdrivers

Globalization

Adding higher valueConstruction of new

business

Changingthe

business structure

There is things OHARA should change to put our activities so far on track for growth.In the new medium-term management plan (Phase II), two basic strategies have been raised, "conversion of business structure" and "building a new driver for growth".

"Management Philosophy" is OHARA's DNA, and the "Long-term Vision 2020" indicates a future ideal image that OHARA Group should realize. Those are our milestones shared as what we should not change.

Advance in basic strategies ofthe Medium-term Management Plan

Approach to achievingthe long-term vision 2020

Human resource development and organizational culture

In the new medium-term management plan corresponding to Phase II toward the long-term vision 2020, primary strategies for each business were decided as shown below.In order to achieve higher-value added products, diversification and globalization in a speedy manner, business resources are inten-sively devoted to the primary strategies

Long-Term Vision 2020

Financial TargetsBuilding a global optical glass production systemIn response to changes in the operating environment, the Company will set up a new glass dissolution base overseas .Enhancing global cost competitiveness

Restructuring the low Tg glass development, production, and sales systemsShorten periods for developing materials- Innovate production technologies- Expand the range of product types- Start operations in the downstream process, such as glass molding and lens polishing

Restructuring the glass disks for hard disks devices business- Launch products that will be compatible with the next-generation heat-assisted magnetic recording system.- Bolster the provision of solutions for processing technologies and the supply chain.

Restructuring the special glass business- Respond to high-precision exposure devices.- Focus on developing products for large products for uses in space and astronomical observation.- Expand sales of the world’s No. 1 zero-expansion material to enter the EUV market.

Developing new businesses Lithium ion battery business- Develop a solid electrolyte, a key component of the next-generation lithium battery- Contribute to the commercialization of next-generation batteries, including metal lithium batteries and all-solid lithium ion batteries

OtherDevelop environmentally friendly products featuring superb functionality(such as optical materials and photocatalyst materials for concentrating solar powergeneration systems).à Help usher in a new era in energy and the environment.

In order to accelerate movements from development to commercialization, a system of incubation (i.e., fostering business) is enhanced. Respectively in optical, electronics and environmental/energy businesses, new drivers for growth will be constructed by quickly hatching eggs of at t rac t ive bus inesses wh i ch a re bo rn i n t he development phase, and leading them to mass production and commercialization. To this end, we will vitalize three activities, "seeking customer's needs", "seeking seeds in OHARA Group" and "seeking connection and contact points between the customer's needs and seeds in OHARA.

50,000

Net sales（million yen）

Net sales

Ordinary profit

ROA (return on assets)

Rate of interest-bearing

liabilities to total assets

42 billion yen or more

4.7 billion yen or more

7.0% or more

15.0% or less

Optical businessElectronics businessOrdinary profit

Ordinary profit（million yen）

7,000

6,000

5,000

4,000

3,000

2,000

1,000

40,000

30,000

20,000

10,000

2012

25,00026,000

28,500

13,500

10,7007,600

［32,600］［36,700］

［42,000］

2,100

3,200

4,700

2013 2014

FY2014

0 0

The environment surrounding OHARA has drastically changed.In Japan where melting facilities are concentrated, it is necessary to respond to multiple risks such as prolonged strong yen, electric power issues, and skyrocketing rare earth prices.In the new medium-term management plan, regarding especially growing demand in Asia as a chance, we have shared awareness that it is important to make efforts for converting their momentum to resources of Group's growth power and competitiveness. We will reform our corporate structure to enable cont inuous development by proactively converting business structures and optimizing systems for development, production and sales.

07

Optical business p. 8Electronics Business p. 8

OHARA in the SocietyOHARA's technologies are applied in a broad range of productsfrom highly-specialized products related to spacedevelopment to home appliances.

Optical BusinessWe provide products which contributeto the future of humanity and impress peopleover the world.

Applications of products

Optical glass produced by OHARA has been used in a wide-range of fields from digital products represented by digital still cameras and projectors to telescopes and microscopes.

Applications of products

OHARA's electronics products have been used in variety of fie lds such as ha rd d i sc substrates, components of semiconductors/liquid crystal exposure devices, substrates for optical communication filters, and substrates for precision measurement.

Major products・Ultra low expansion glass-ceramics (CLEARCERAM™-Z) ・Glass-ceramic substrate for DWDM thin-film filter (WMS™-15)・Glass-ceramics for HDD ・Glass disk for Magnetic Head Flying Height Tester (GD-FHT™)・Fiber glasses for light guide ・i-line high homogeneity glass・Glass for Art・Measurement service on glasses/ceramics

Details of productsIn addition to existing optical glasses, we produce and sell low Tg optical glasses for glass mold lens, which can be shaped at lower temperature to reduce energy consumption and CO2emissions.

p. 9-10

We provide the best quality advanced materialsworldwide.

Electronics Business

Astronomical telescopeSubaru Telescope(on Mauna Kea's summit on Hawaii Island)

Notebook PCs

Single-lens Reflex CamerasProjectors

Electric automobiles

Solar power system

Due to needs in optical design,

various kinds of optical glasses

with diverse refraction

index and dispersion are required.

OHARA's environmentally-friendly

advanced materials

with the best quality

have gained a reputation

for high reliability from customers.

We provide materials

meeting customer's requirements,

for example, intensity, heat resistance,

electric conductivity, shock resistance,

expansion characteristics and

low-alkali elution depending on glasses

and crystallized glasses.

Masahiro Onozawa,Section Manager of Optical ProductSales Section No.1

Akio Nishida,General Manager of Optical ProductSales Department

Kazuharu Yoshizawa, Optical ProductSales Section No.2

Kazuo Hirano, General Manager of Information ProductSales Department

Hiroyuki Minamikawa, Section Manager of Information ProductSales Section No.2

Yoshihiro Fuchigami, Assistant Section Managerof Information Product Sales Section No.1

Environmental/Energy Business

08

Optical business p. 8Electronics Business p. 8

OHARA in the SocietyOHARA's technologies are applied in a broad range of productsfrom highly-specialized products related to spacedevelopment to home appliances.

Optical BusinessWe provide products which contributeto the future of humanity and impress peopleover the world.

Applications of products

Optical glass produced by OHARA has been used in a wide-range of fields from digital products represented by digital still cameras and projectors to telescopes and microscopes.

Applications of products

OHARA's electronics products have been used in variety of fie lds such as ha rd d i sc substrates, components of semiconductors/liquid crystal exposure devices, substrates for optical communication filters, and substrates for precision measurement.

Major products・Ultra low expansion glass-ceramics (CLEARCERAM™-Z) ・Glass-ceramic substrate for DWDM thin-film filter (WMS™-15)・Glass-ceramics for HDD ・Glass disk for Magnetic Head Flying Height Tester (GD-FHT™)・Fiber glasses for light guide ・i-line high homogeneity glass・Glass for Art・Measurement service on glasses/ceramics

Details of productsIn addition to existing optical glasses, we produce and sell low Tg optical glasses for glass mold lens, which can be shaped at lower temperature to reduce energy consumption and CO2emissions.

p. 9-10

We provide the best quality advanced materialsworldwide.

Electronics Business

Astronomical telescopeSubaru Telescope(on Mauna Kea's summit on Hawaii Island)

Notebook PCs

Single-lens Reflex CamerasProjectors

Electric automobiles

Solar power system

Due to needs in optical design,

various kinds of optical glasses

with diverse refraction

index and dispersion are required.

OHARA's environmentally-friendly

advanced materials

with the best quality

have gained a reputation

for high reliability from customers.

We provide materials

meeting customer's requirements,

for example, intensity, heat resistance,

electric conductivity, shock resistance,

expansion characteristics and

low-alkali elution depending on glasses

and crystallized glasses.

Masahiro Onozawa,Section Manager of Optical ProductSales Section No.1

Akio Nishida,General Manager of Optical ProductSales Department

Kazuharu Yoshizawa, Optical ProductSales Section No.2

Kazuo Hirano, General Manager of Information ProductSales Department

Hiroyuki Minamikawa, Section Manager of Information ProductSales Section No.2

Yoshihiro Fuchigami, Assistant Section Managerof Information Product Sales Section No.1

Environmental/Energy Business

09

Environmental / Energy Business

Incubation= Fostering businesses

GM Com

mercialization

Promotion O

ffice

LB Commercialization

Promotion O

ffice

Becoming

independent

as a business

or expanding

its scale

Incubation Center

Introducing items

of new products

from Research

and

Development Division

or outside

President

OHARA's Challengeto Achievement of Recycling Society

In addition to existing optical and electronics businesses, environment/energy will be the third pillar of our business.

Fostering projects in environmental/energy business

VOICE

As the entire society is largely shifting to a recycling society, it is necessary for OHARA to challenge new industrial domains which we have never experienced. Therefore, "Incubation Center" was established to foster businesses and develop OHARA's new source of earnings.Presently, the Incubation Center has conducted activities with the mission of early commercialization of LB business focusing on the next-generation lithium battery and GM business related glass mold lens*, as well as creation of commercialization projects following them.

* Lens production method in which glass is shaped with high-precision metallic mold as heated and pressured. With this production method, the number of lens production processes and relevant emissions can be reduced. Especially, the method would enable mass production of aspheric lens which it had taken much time to produce with conventional grinding method.

Cathode (Pt-C Catalysis)

Aqueous Solution

LICGC™Protective film

Anodee-←

Diagram of an experimental lithium-air battery (above) and a primary battery which was experimentally produced to verify a principle of solid electrolyte (below). The Capacity is 450Wh/kg, about three times as much as ones of ordinary lithium-ion batteries.

Systems to promote environmental/energy business

OHARA's Technologyis needed to solve difficult issues.

VOICE

Kei Chiba,Information Product Sales Section No. 2

Creating new value is a challenge and a dream to developers. Lithium-ion conductive glass ceramics (LICGC™) is a material of which contribution to solid batteries can be expected. In order to promote development and diffusion of this new battery, we feel that it is necessary to supply high quality products at low cost to markets. Therefore, establishing technology which OHARA had not had, we are striving to design the process to manufacture the batteries at lower cost. We intend to promote the development with an eye to commercialization so as to contribute to the achievement of the highly safe next-generation energy as early as possible.

LICGC™ Green Sheet Ceramics Jun Teramoto,LB Business Commercialization Sec.

Keisuke Okita, Manager of GM Business Commercialization Sec.Shotaro Miyake, Assistant Section Manager of GM Business Commercialization Sec.Hirokazu Saito, President and Director of Incubation Center Kousuke Nakajima, Deputy Director of Incubation Center Yasushi Inda, Assistant Section Manager of LB Business Commercialization Sec.

Tatsuya Kato, Director of LB Business Commercialization Sec.

Li+

OHARA's optical glass contr ibutes to improving performance of concentrated photovoltaic generation systems. As the area of solar battery can be reduced, compared with flat-plate types, it can be expected simultaneously to solve a shortage of materials (s i l icon) which are concerned at the time of shifting to recyclable energy worldwide, and generate power with high conversion efficiency. In the concentrated photovoltaic generation system, highly refractive, transparent, and durable optical glass is needed as a secondary lens, which can effectively concentrate light on luminous elements. With a mega solar power generation system in a vast desert, we are committed to contributing to power supply over the world.

LB business

We are aiming at commercialization of next-generation lithium-ion batteries. In present lithium-ion batteries, technology for "high capacity" and "safety" which is required for the next-generation batteries has not been established yet.

OHARA will realize the next-generation battery by commercializing LICGC™, safe oxide system ceramics which is less hazardous but superior to other solid electrolyte materials, as solid electrolyte for the first time in the world, in order to contribute to the achievement of a sustainable society in terms of energy efficiency.

Other business

We are aiming at commercialization of a concentrated photovoltaic generation system (CPV). Through making suggestions on glass materials and optical elements which are environmentally-friendly and have excellent functional features, such as durability and optical characteristics, we will contribute to further spread of recyclable energy.

10

Environmental / Energy Business

Incubation= Fostering businesses

GM Com

mercialization

Promotion O

ffice

LB Commercialization

Promotion O

ffice

Becoming

independent

as a business

or expanding

its scale

Incubation Center

Introducing items

of new products

from Research

and

Development Division

or outside

President

OHARA's Challengeto Achievement of Recycling Society

In addition to existing optical and electronics businesses, environment/energy will be the third pillar of our business.

Fostering projects in environmental/energy business

VOICE

As the entire society is largely shifting to a recycling society, it is necessary for OHARA to challenge new industrial domains which we have never experienced. Therefore, "Incubation Center" was established to foster businesses and develop OHARA's new source of earnings.Presently, the Incubation Center has conducted activities with the mission of early commercialization of LB business focusing on the next-generation lithium battery and GM business related glass mold lens*, as well as creation of commercialization projects following them.

* Lens production method in which glass is shaped with high-precision metallic mold as heated and pressured. With this production method, the number of lens production processes and relevant emissions can be reduced. Especially, the method would enable mass production of aspheric lens which it had taken much time to produce with conventional grinding method.

Cathode (Pt-C Catalysis)

Aqueous Solution

LICGC™Protective film

Anodee-←

Diagram of an experimental lithium-air battery (above) and a primary battery which was experimentally produced to verify a principle of solid electrolyte (below). The Capacity is 450Wh/kg, about three times as much as ones of ordinary lithium-ion batteries.

Systems to promote environmental/energy business

OHARA's Technologyis needed to solve difficult issues.

VOICE

Kei Chiba,Information Product Sales Section No. 2

Creating new value is a challenge and a dream to developers. Lithium-ion conductive glass ceramics (LICGC™) is a material of which contribution to solid batteries can be expected. In order to promote development and diffusion of this new battery, we feel that it is necessary to supply high quality products at low cost to markets. Therefore, establishing technology which OHARA had not had, we are striving to design the process to manufacture the batteries at lower cost. We intend to promote the development with an eye to commercialization so as to contribute to the achievement of the highly safe next-generation energy as early as possible.

LICGC™ Green Sheet Ceramics Jun Teramoto,LB Business Commercialization Sec.

Keisuke Okita, Manager of GM Business Commercialization Sec.Shotaro Miyake, Assistant Section Manager of GM Business Commercialization Sec.Hirokazu Saito, President and Director of Incubation Center Kousuke Nakajima, Deputy Director of Incubation Center Yasushi Inda, Assistant Section Manager of LB Business Commercialization Sec.

Tatsuya Kato, Director of LB Business Commercialization Sec.

Li+

OHARA's optical glass contr ibutes to improving performance of concentrated photovoltaic generation systems. As the area of solar battery can be reduced, compared with flat-plate types, it can be expected simultaneously to solve a shortage of materials (s i l icon) which are concerned at the time of shifting to recyclable energy worldwide, and generate power with high conversion efficiency. In the concentrated photovoltaic generation system, highly refractive, transparent, and durable optical glass is needed as a secondary lens, which can effectively concentrate light on luminous elements. With a mega solar power generation system in a vast desert, we are committed to contributing to power supply over the world.

LB business

We are aiming at commercialization of next-generation lithium-ion batteries. In present lithium-ion batteries, technology for "high capacity" and "safety" which is required for the next-generation batteries has not been established yet.

OHARA will realize the next-generation battery by commercializing LICGC™, safe oxide system ceramics which is less hazardous but superior to other solid electrolyte materials, as solid electrolyte for the first time in the world, in order to contribute to the achievement of a sustainable society in terms of energy efficiency.

Other business

We are aiming at commercialization of a concentrated photovoltaic generation system (CPV). Through making suggestions on glass materials and optical elements which are environmentally-friendly and have excellent functional features, such as durability and optical characteristics, we will contribute to further spread of recyclable energy.

11

OHARA is aware that enhancement and improvement of corporate governance is one of the top priorities in management to increase the confidence of various stakeholders and maximize our corporate value. In order to ensure appropriate and highly transparent decision-making, the Board of Directors including three outside directors, the Board of Auditors including thee outside auditors, and the Management Council (composed of full-time directors and general managers appointed by President) work together, led by President, to make management decisions exactly and efficiently from the strategic viewpoint. This will enable us to enhance and improve corporate governance.

The Business Audit Depar tment, which is independent from operating divisions, is in charge of OHARA Group's internal audit. In accordance with the auditing plan accepted by the President for each fiscal year, the department checked if the operations of all divisions and subsidiaries of the OHARA Group are properly conducted in compliance with the internal regulations, including those for administrative authority. The department also examines the appropriateness and legality of operational procedures as well as the efficacy and efficiency of operations to provide instructions on improvement and raise issues to operating divisions.

The Internal Control Committee was established in May 2006 to strengthen the internal controls within the OHARA Group. The Company President serves as the chairman of the committee, which includes the headquarters directors, subsidiary presidents, general managers of headquarters divisions, and the committee secretariat. The business Audit Department serving as the committee secretariat evaluates internal control related to OHARA Group's financial reports, and reports the result of evaluation and items to be improved to the Internal Control Committee, seeking directions.In this way, reliability of the OHARA Group's financial reports are ensured.

Corporate Governance Diagram

OHARA ensures ef fectiveness of internal control by having an organization independent from operating divisions evaluate validity, improvement, and operation of the internal control system. With "internal control audit", the status of improvement and operation of the internal control system is evaluated. If any, problems would be resolved.

Concept of internal control

Approach toward establishment of internal control

General Meeting of Shareholders

Divisions, Factories, Group companies

Board of Directors 11 directors

(including 3 outside directors)Board of Auditors Accounting Auditors

Safety & Health Committee

Environmental

Managem

ent Council

Quality Assurance Council

Business Audit Department

Information Disclosure

Committee

Risk Managem

ent Committee

Ethics and Compliance

Committee

Internal Control Committee

RepresentativeDirectors

4 auditors(including 3 outside auditors)

Management Council(makes decisions onimportant matters, etc.)

Ensuring validity and efficiency of divisional management with internal audit

Ensuring reliability of financial reports with internal control audit

S i n c e r e a c t i v i t i e sWe will endeavor to develop and provide useful products and services for the society, and to gain the satisfaction and trust of our customers. To achieve this goal, we will observe all laws and regulations in countries and regions where we conduct business. We will also respect the culture, customs, and traditions of the countries and regions. We will conduct socially suitable corporate activity through fair, transparent, and competition, and business dealings.

Corporate Governance

Sincere activities

12

OHARA is promoting risk management led by the Risk Management Committee in accordance with OHARA Group Risk Management Policy."

In preparation for emergency events including natural disasters which may hinder smooth business activities and management targets, OHARA formulated its Business Continuity Plan (BCP) in 2007.In principle, the BCP is reviewed in August every year. In FY2011, evaluation of risks and countermeasures were completely amended, in consideration of events that exceeded the initial projection, such as the Great East Japan Earthquake and skyrocketing rare earth prices.

OHARA has established "Risk Management Rules" which stipulates management of and measures against risks with critical impacts on corporate management. In a drastically changing society, we strive to understand risks at the board of directors and management meetings in order to take appropriate actions to the events, and consider and execute specific measures as needed. During FY2011, the stable procurement of rare earth and skyrocketing prices continued to be major issues from the previous year. Using a large amount of lanthanum as raw material for high refractive index optical glass, OHARA is required to respond quickly to those issues. Accordingly, we started developing improved products that use less amount of lanthanum, exploring new channels for procurement at the lowest cost, and manufacturing products in China where rare earth is mined.

OHARA has established the Guidelines of Conduct in accordance with the OHARA's philosophy based on our corporate principles. The ""Ethics and Compliance Committee"" gives a variety of in-house seminars in accordance with the Guidelines on the continuous basis in order to ensure that every employee of OHARA comply with laws and regulations and execute business operations with a high sense of ethics in a fair and proper manner."

In accordance with the OHARA's philosophy based on our corporate principles and the Guidelines of Conduct, OHARA stipulated the Code of Conduct: Guidelines, which specify major points of laws and regulations to be complied with in operations as well as the policy of compliance with and the matters to be noted about those laws and regulations. These guidelines have been distributed to every employee since 2005.

All employees of OHARA are supposed to attend compliance seminars using the Code of Conduct: Guidelines as a part of training they receive immediately after they join OHARA. In addition, seminars for all employees are given as needed to ensure thorough compliance with the Code of Conduct: Guidelines. In FY2011, education with e-learning for employees who had not taken educational courses and the company-wide compliance seminar were provided to raise employees' awareness.

Damages from the Great East Japan Earthquake and OHARA's responses Compliance Seminar

Main Topics Covered in Compliance Seminars

○ Outline of the revised Unfair Competition Prevention Act

○ Basic knowledge of contracts

○ Fundamentals of the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors

○ Fundamentals of security export control

○ Points for non-disclosure agreement review

○ Fundamentals of credit management

○ Training on intellectual property

Outline of the Code of Conduct: Guidelines1. Matters concerning individuals○ Respect for human rights and prohibition of discrimination○ Prohibition of drunken driving ○ Protection of assets

○ Prohibition of insider trading○ Prohibition of sexual harassment○ Prohibition of illegal copying○ Prohibition of acts in conflict of interest2. Matters concerning sales activities

○ Protection of trade secret○ Fair trading with subcontractors○ Prohibition of unfair competition○ Compliance with laws and regulations

related to import export trade○ Respect for and protection of intellectual

property○ Compliance with the Antimonopoly Act○ Credit management○ Inappropriate offer and receipt of

benefits

3. Matters concerning a corporation○ Protection of personal information○ Manifestation of a corporate intention○ Compliance with tax laws○ Prohibition of religious and political

activities as well as sideline activities in the premise of the company.

○ Safety and health as well as disaster prevention

○ Efforts for creating a quality assurance system

○ Appropriate publicity activities and environmental protection

Compliance promotion system

The Great East Japan Earthquake - the situation and efforts of OHARA -

Code of Conduct: Guidelines

Risk Management System

Continuous Improvement of the Business Continuity Plan

Response to Operational Risk

Compliance Risk Management

Guidelines of Conduct

1. Do not be involved with any act or activity that is problematic in light of ethics or compliance.

2. Honestly admit a violation, deviation or error and promptly take corrective and preventive measures.

3. Sufficient education shall be offered to every officer and employee of the OHARA Group on the continuous basis, and the results of such education shall be likewise confirmed.

4. An appropriate self-audit shall be made every fiscal year in all organizations within the OHARA Group in accordance with the Internal Audit Policy.

5. Proactive approaches are taken as a priority issue in management

1. Damage on OHARA Fortunately, no one was injured or involved in other human suffering. However, cut-off of power and gas supply and response to subsequent power conservation requirements had slight adverse effects on our production systems. Some buildings suffered damage such as cracks.

2. Support activities The OHARA Group donated about 14.8 million yen as relief money. The Women's volley ball club took part in a flea market hosted by Sagamihara Chamber of Commerce and donated proceeds. OHARA also sent relief goods to business partners in Tohoku and North Kanto.

3. In-house stockpile Dry foods, water and emergency packs are prepared for all employees. It is planned to purchase missing articles sequentially.

Sincere activities

OHARA produces glass materials essential for optics, electronics, and environmental/energy industries. Therefore, we consider it our important social responsibility to keep business at the usual level even in times of emergency, and continue to supply products to customers in a stable manner.Triggered by the earthquake in March 2011, OHARA enhanced its "Manual for responding to disasters" in preparation for large scale natural disasters to clarify the criteria of decision, procedures, and a system of instructions and orders.

13

Improving Customer Satisfaction through Quality Control

For the purpose of providing products that satisfy our customers, OHARA introduced a quality management system of ISO9000 International Standard to construct a quality assurance system in 1996. Effectively operating this system, we strive to improve quality of products and services. In "Confirm customer's request" of the OHARA's quality policy, it is stipulated to "fully understand customer's request first, and then have all concerned parties know it." This is because the idea that quality is judged by customers underlies the quality policy.

As customers' activities have been shifting to overseas, it has become necessary to expand the scope of quality assurance not only in Japan but also to overseas. In order to win the trust of customers in OHARA's products, quality improvement activities have been conducted for domestic and overseas subsidiaries, as well as subcontracting plants. To be specific, the system between OHARA and subcontracting plants was built by making agreements with the plants on QC process

As for skyrocketing prices of rare earth which have been recognized as a social problem, OHARA is no exception where procurement of raw materials including lanthanum oxide depends on China. As materials for optical glass are required to have high purity and quality, it is necessary to clear very strict requirements for use. Accordingly, OHARA analyzes impure substances in and purity of the materials to evaluate whether they are appropriate as materials for optical glass. Management of impure substances in materials is the most important evaluation item to maintain individual properties of optical glass.As traces of impure substances in materials have to be measured, the material analysis is implemented with the meticulous care in order not to allow dust, etc. to contaminate measurement sample. These tasks are conducted by personnel with abundant experience and knowledge on chemistry. With the goal of further improving quality, we will also foster a professional team of analysis.

Construction of Quality Assurance System Quality Control of Materials

Domestic and Overseas Assurance Management Activities

chart and quality assurance so as to entrust the manufacturing process to them without any problem. Furthermore, formulating the guideline of quality assurance, we have conducted activities, such as "improvement in PDCA Cycle", "accepting visualization of processes", "equalization of level of plant inspectors and certification".

Quality control activities at subcontracting plants

QC process chart/management with work procedures manual

Placing orders(OHARA)

FinalInspection Shipment

Acceptance(subcontractors) Process ① Process ② Process ③

Management with agreement on quality assurance

Feedback of quality information

Submitting a performance record

Process audit

Sincere activities

Quality policy OHARA INC. pursues the highest quality, and everyone involved in its operations always intends to "provide customer satisfaction" in accordance with the following guidelines to contribute to "creating the future of man and society" with continuous technical innovation.

Guidelines (excerpt)○ Guidelines of Conduct　・Start working immediately, never give it up, and work it through. 　・Be thoroughly cost-conscious and eliminate a wasteful use of resources.　・Follow routines, deadlines, and rules.○ Earn Customer's trust and satisfaction.○ Confirm customer's request.○ Establish and continuously improve a product management system. ○ Elaborate quality.○ Thoroughly disseminate the quality policy to all employees.

Only points required by OHARA are incorporated into QC process chart/work procedures manual

● *Clarify management items to be in conformance.● *Standardize operations to eliminate variation.● *Implement process audit according to QC process chart.● *Levels of inspection/measurement are equal to ones of OHARA. ● *In principle, leveling of inspection/measurement is conducted with inspectors of OHARA on a one-to-one basis.

Scene of materials analysis

S i n c e r e a c t i v i t i e s

1414

OHARA and voluntary employees have taken part in Sagamihara Ohisama Power Plant Project as solar supporters. This is an activity conducted jointly by Sagamihara city and Photovoltaic Power Plant Network PV Sagamihara in the city aiming to contribute to prevention o f g l o b a l w a r m i n g by b u i l d i n g a photovoltaic power plant in Sagamihara city. The f irst equipment was instal led in Ohnodai Children Center, and the l ighting ceremony was implemented on March 5, 2011. An officer of OHARA attended the ceremony as a solar supporter, and announced that OHARA would proactively conduct the activities in the future.

OHARA cooperates in activities of local fire companies. As some employees have been active as members of the local fire companies, we provide our premises for their training. As a result of such activities, OHARA was certified as a volunteer fire corps office. We intend to proactively support activities of local fire companies in the future.

Sagami River is a water source of Kanagawa prefecture, and the both banks full of nature are an oasis for residents of the prefecture. Therefore, the valuable natural environment should be protected in the future. Sagamihara city semi-annually conducts cleanup activities for Sagami River titled "Sagamigawa Cleaning Campaign" with organizations and individuals in the city.

OHARA has participated in the activities about 30 years since the beginning. Despite only a few participants at first, over 40 employees and their family members participate in the activities every time in recent years. Under the slogan of "City of Water, Sagamihara", we will take part in the city's environmental conservation activities.

February Accepted Machida Student Manufacturing Tour (Plant tour, Discussion) (11 university students, 3 staff)

March Participated in the lighting ceremony for the first equipment of Civic Ohisama Power Plant

(Ohnodai Children Center)June &October Sagamigawa Cleaning Campaign (Takada Bridge)June Certified as a volunteer fire corps office Ceremony to issue a certification of a volunteer fire corps

officeJune Participated in Global Warming Prevention Campaign (in

front of Sagamihara Station)October Supporting Sagamihara Environment Fair October Appointed as a member of the committee for reviewing

and promoting global warming prevention measures of Sagamihara city

December Participated in Global Warming Prevention Campaign (in front of Hashimoto Station)

December Participated in Street Cleanup Campaign

H a r m o n y w i t h S o c i e t y

Harm

ony with Society

OHARA's business activities are based on coexistence with local and international societies.As a "good corporate citizen", OHARA will proactively work on social action programs.

Relation with Local CommunitiesMajor Activities for Social Contribution in FY2011

Sagamihara Solar Supporter

Certified as a volunteer fire corps officeParticipation in Sagamigawa Cleaning Campaign

Eisaku Muneta, DirectorSupervising Sales＆Sales Subsidiaries

I have been to Sagamigawa for playing and barbecue, etc. since I was child. However, participating in the Cleaning Campaign, I recognized how sloppy cleanup badly influences the environment.We should keep neatly cleaning up after enjoying in mind. I would like to value behaving with a sense of purpose common to several people of neighboring companies.

Sagamigawa Cleaning Campaign

Participated in Sagamigawa Cleaning Campaign with family

120

110

100

90

80

70

60

50

40

30

20

10

0

No. of participants in Sagamigawa Cleaning Campaign(persons)

2007 20092008 2010 2011　(FY)

38 36

56

74

100

1515

H a r m o n y w i t h S o c i e t y

Harm

ony with Society

As a part of countermeasures against global warming, Sagamihara city is formulating an action plan with an eye to reducing greenhouse gas emission. In order to steadily promote the activities, the committee for reviewing and promoting global warming prevention measures of Sagamihara city was established. OHARA was appointed as a member of the committee. We will assist the activities to the best of our ability so that comfortable environment would be sustained in the future.

OHARA has been engaged in the cost reduction campaign based on Toyota Production System named "Jiayou-sakusen (Cheer-up! Campaign)" since 2004. For the purpose of maintaining and enhancing the morale fostered through this campaign, as well as promoting beautification of neighboring areas, we are cleaning up the periphery of the Company's premises on Friday morning every two weeks, together with Yamada Corporation which is located adjacent to us.

OHARA collects PET bottle caps, empty can pull tabs, and used stamps and donates them to NPOs, etc. In FY2011, collecting 37.2kg of empty can pull tabs through Shiroyama Shokokai, we contributed to donation of wheelchairs to Ofunato city devastated by the Great East Japan Earthquake. This shows what small actions taken together can do, and we will continue this activity through the good will of each employee.

As a part of local contribution activities, OHARA accepts factory tours for schools - mainly nearby schools. During 2011, the total of 290 visitors centering on elementary school students participated in the factory tours. Many of them observed manufacturing at a factory for the first time, and asked various questions on materials and working styles. We hope that the tour will help them become interested in and think about the meaning of working.

Participating in factory toursYoshihiro Omori, Law Instructor, Kanagawa Medical Juvenile

Training School

For students with few working experiences, getting a job after release from the juvenile training school is a serious problem. Most students directly saw employees working for the first time. Therefore, OHARA's factory tour provided valuable experiences for students. It is amazing that OHARA has continued to be a major maker in the optical glass industry, with the dynamic vision toward innovation, "the creation of the future for human and society". It was the most wonderful learning opportunity that we could see employees w h o s u p p o r t t h e e x c e l l e n t performance working with pride and loyalty to the Company. This factory tour was exciting for students and our staff. At the same time, we feel happy to have been able to learn your spirit as much as possible.

The committee for reviewing and promoting global warming prevention measures of Sagamihara city Accepting Factory Tours

Morning Cleaning

Collaboration with NPO & NGO

1616

OHARA has specif ied the following fundamental principles of information disclosure in accordance with OHARA's philosophy based on our corporate principle.

OHARA takes it granted that we are responsible to protect information obtained in course of conducting business. In order to completely protect information assets and establish a strict management system, OHARA instituted the "Personal Information Protection Rule" following the enforcement of the Act on the Protection of Personal Information in April 2005 and has placed the "Policy for the Protection of the Personal Information" on its website. In addition, we have tried to ensure that everyone in the company is aware of it by mentioning protection of personal information in the Code of Conduct: Guidelines (P.12).

OHAR A makes ef for ts for bui lding good relat ionships with shareholders and investors through communication with them and a stable dividend policy, as well as fair and timely disclosure of information.To be specific, we held the Annual General Meeting of Shareholders late in January, send "Business Reports" to shareholders twice a year, and held financial report briefing sessions for institutional investors. The Department in charge of IR also responds individually to interviews.

As tools for communication with customers, a small catalog regarding OHARA's optical glass, called a pocket catalog, and CSR Reports are effectively used. The pocket catalog is elaborately produced every year, responding to three languages, Japanese, English and Chinese. Furthermore, a CSR Report prepared annually is delivered to a wide range of stakeholders, and feedbacks through questionnaires are used for the following fiscal year. We also published a company brochure, financial reports, and Map of Optical Design Indices for Optical Glass, etc.

OHARA issues the OPTPIA, a company newsletter, four times a year in order to communicate the management policy to employees, have it well understood by them, and vitalize the company. "In FY2011, establishment of NHG-OHARA OPTICS (XIANGYANG) Co., LTD., a joint venture company in China, and efforts of Incubation Center for fostering new businesses were featured, in order to facilitate employees' understanding and dissemination of policies.Furthermore, the first social gathering of an ex-employee organization named "Kojukai" was held to facilitate c l o s e r c o m m u n i c a t i o n a m o n g members, and provide information on the present status and the future plan of the Company to former employees.

d i s c l o s u r e o f i n f o r m a t i o nTo gain the understanding of and support for our corporate activities from society, we are prepared to disclose our company information in a timely and appropriate manner and to engage in sincere and highly transparent communication.

Fundamental Principles of Information Disclosure Communication with Stakeholders

Fiscal Year The number of requests for interviews (No.of request)

2007 932008 812009 992010 1082011 73※

The number of requests for interviewsby fiscal year

Financial report briefing sessions

The 1st social gathering of Kojukai

Fundamental Principles of Information Disclosure1. Transparency

Ensure transparency irrespective of whether the content of disclosed information is favorable or unfavorable to the Company and disclose information on the basis of facts.

2. Satisfy the requirements of Financial Instruments and Exchange Act and generally established norms including those of Tokyo Stock Exchanges.

Satisfy the requirements of Financial Instruments and Exchange Act and generally established norms including those of Tokyo Stock Exchanges.

3. Guarantee of Confidentiality and Timeliness of Disclosure

Endeavor to disseminate information in a fair manner to diverse stakeholders.

4. Fairness

Endeavor to disseminate information in a fair manner to diverse stakeholders.

5. Continuity

There should be continuity in the contents of information disclosed.

6. Confidentiality

Do not leak any information to any outside third party until the Company disclose it officially.

Communication with Shareholders and Investors

Communication with Current and Former Employees

Communication with Customers

*As the Great East Japan Earthquake occurred on the day after the earnings announcement for the first quarter (March 10), all IR activities for the first quarter were cancelled. Consequently, the number of requests for interviews decreased in FY2011.

Communication Tools● Company newsletter OPTPIA● CSR Report● Company Brochure● Map of Optical Design 　 Indices for Optical Glass● Pocket Catalog of Optical Glass● Financial Reports

Policy for the Protection of the Personal Information1. Statement of principles OHARA INC. (hereinafter, the "Company") agrees to protect the personal

information which we have received from our customers and comply with the relevant statutes associated with this.

2. Handling of personal information As measures to prevent a leakage, loss, etc. of personal information,

the Company has instituted the rules for in-house handling of personal information and implemented countermeasures against unauthorized access from outside, etc. We will strive to improve, not to mention maintain, such rules and countermeasures continuously for stronger protection, without being content with the status quo. In principle, we do not disclose or provide the personal information that we have received to any third parties. When we receive personal information, we will clarify the purpose for which it is to be used. In case we intend to use such information for any other purpose than the one for which it was originally intended, we will inform our customers of such an intention and seek authorization from our customers.

3. Disclosure of personal information If a claim from a customer is received for the disclosure, revision, or deletion

of personal information, the suspension of using personal information, etc., we will promptly confirm the contents of the claim and take a due response. In receiving a claim, we will confirm the identity of a customer, of which we beg your understanding. Any communication pertaining to the above-mentioned claim should be submitted to the following person/position.

4. Contact: General Affairs Section, General Affairs Department, OHARA INC. Phone: 042-772-2101 Fax: 042-774-1071 E-mail : info@ohara-inc.co.jp

Efforts concerning the Protection of Personal Information

Disclosure of inform

ation

1717

OHARA is promoting a variety of activities to conserve the environment, aiming at harmony between its corporate activities and the global environment.

PhilosophyUnder the internationally accepted philosophy of sustainable development, OHARA recognizes that achieving compatibility between corporate activities and the environment is one of the most critical issues in running a business. The entire Company will continue to refine its environmental management systems so that they comply with international standards, and operate in the areas of light, electronics, the environment and energy, effectively harnessing the technologies we have developed for optical glass, specialty glass, hard disc substrates, and applied products. In this way, we will actively pursue environmental management and contribute to society.

Policiesａ）We will comply with laws and regulations related to the environment of the

countries and local jurisdictions in which we operate, as well as the rules of conduct of industry. At the same time, we will establish independent standards for environmental management and improve the environment.

ｂ）We will reduce waste and encourage reuse, energy conservation and resource conservation.

1. We will reduce the volume of glass scrap, plastics, refractory bricks, etc. and reuse them where possible.

2. We will conserve electricity and gas energy and reduce C02 emissions by improving the air conditioning and lighting systems, production processes and production facilities of our factories.

3. We will conserve source materials and other natural resources by enhancing the yield ratio in glass manufacturing.

ｃ）We will develop and supply products that benefit the global environment.ｄ）We will protect the environment from contamination and develop more

environmentally friendly products, for instance by finding alternatives to hazardous substances.We will also follow international rules and regulations, as well as customer requirements that we have accepted, while strengthening systems for controlling the chemical substances contained in our products.

ｅ）We will set environmental objectives and targets, which are to be revised in response to changes in the surrounding conditions, while at the same time continuing to improve environmental management systems.

ｆ）We will implement and maintain environmental policies by operating environmental management systems, and will make them known to all workers in our facilities. Policies are to be made public.

ｇ）We will seek to work in harmony with regional communities, business partners and related organizations.

E n v i r o n m e n t a l P r o t e c t i o n

Environmental Protection

We cherish our one precious earth. In all phases of our company activities the preservation of our environment is strongly emphasized. We strive to accomplish this through independent and positive activities.

EnvironmentalManagement Council

President

Waste Reduction andReuse Prom

otion Committee

Energy SavingProm

otion Committee

Environmental Pollutant

Reduction Promotion Com

mittee

Environmental

Crisis Managem

ent Committee

Departm

ents

EnvironmentalManagement Promotion Headquarters(Secretariat: Environment Safety Section)

ManagementCouncil

Internal EnvironmentalAuditors

Environmental ManagementGeneral Manager

WaterWater Usage・Tap Water 1,401m3・Groundwater 3,255m3

Majorraw materials

Glass raw materialsAmount of glass purchased

Final disposal amount35.5t

Recycled amount236.5t

* Definition of recycled cullet: Waste glass generated at each process. It is recycled in melting and other processes.

Energy Energy 1,603kℓ(Crude oil equivalent)

Productionvolume

Total dissolution

PROCESS

Waste

Waste amount 272t・Glass waste・Refractory waste・Plastic kinds of waste

OHARA INC.

Recycledcullet*

Figures relevant to environmental burdens (monthly average)

Products Shipping volume

Water PRTR designated substancesin factory effluent 1.9kg

Air and GlobalWarmingSubstances

Air (PRTR designated substances) 73.5kgCO₂ emissions 2,576t-CO₂

System for Promoting Environmental Activities

Environmental Management

Philosophy and Policies for Environmental Management

Material Balance

1818

廃棄物削減・再利用推進委員会

OHARA's MSDS Inform employeesvia divisions

General Affairs Section/EnvironmentalSafety Section

Information on Laws andRegulations ProductChemical IngredientsManagement

Purchasing SectionResources/Materials

/Reagents MSDS*3

ProductionControl Section 1Purchased

Materials MSDS

Manager in charge of chemicals

MSDS ManagerMSDS DeveloperProduction

Control Section 1Personnel Section

The legislative control related to chemicals has increasingly become stricter worldwide. While the RoHS Directive*1 and REACH Regulation*2 in Europe are representative, the legislative control of chemicals has been also enhanced in Asian countries. As of November 2011, in REACH Regulation, 53 substances have been designated as Substance of Very High Concern (SVHC). More substances are expected to be added to the list in the future. In order to enhance the management of chemicals contained in products, OHARA is striving to make products free from lead and arsenic in the stage of development and designing, analyze impure substances in glass materials purchased, and thoroughly prevent contamination by impure substances in each process, in addition to providing the company-wide education. We intend to further enhance the management of chemicals in supply chains in the future. *1 RoHS Directive: an EU directive to restrict use of specific hazardous substances in electrical and electronic equipment.*2 REACH Regulation: an EU regulation that obliges a company to control the risk of chemicals in EU through their "registration", "evaluation", "authorization" and "restriction."

*3 MSDS: information regarding the properties and handling of chemicals and products containing them

Enhancing environmental consciousness of all employees is indispensable for facilitating environment management activities on a continuous basis.OHARA carries out "Company-wide Awareness Education" of full-time and part-time employees, temporary workers, and employees of cooperating companies working in its premises.In addition to IS014001 related education, primary topics of education include global warming, RoHS Directive, REACH Regulation, and management of chemicals contained in products.Particularly, additional classes are offered on an individual basis at important workplaces related to management of chemicals contained in products for a deeper understanding of the topic.

OHARA promotes the "No Car Day" campaign as a part of "Harmony with Environment in Local Communities," which is one of company-wide environmental goals and recommends commuting by public transportation, foot or bicycle in an attempt to reduce C02 emissions.With the fixed day to enhance the "No Car Day" campaign, a lot of employees take part in this campaign which would lead to measures for metabolism in cooperation with a health promotion campaign.

Environmental Protection

Education on Environmental Conservation

Importance of Chemicals Management

"No Car Day" Campaign

Management system for chemicals

25,000

20,000

15,000

10,000

5,000

0 2008 2009 2010 2011 　（FY）

19,854

2007

14,874 13,694

22,515

18,341

（kg-CO2）

CO2　reduction pertaining to commuting by car

CO2 reduction is calculated by dividing the average commuting distance of employees commuting by car by the average gas mileage and multiplying the result by CO2 emissions per liter of gasoline.

Plastic brought to the Company's recycle center from each workplace is classified into recyclable (eco plastic) and unrecyclable (misc. plastic) to keep track of the total weight of plastic belonging to each category. During FY2011, the total amount of plastic waste decreased. With thorough separation, the recycling rate of eco plastic (material-recycled and heat-recycled plastic) reached 78.2%. Besides, efforts were made to turn PET bottles into valuable materials and donate PET bottle caps (vaccine relief for 523 persons in total).

Separation methods appropriate to each workplace are individually taught by carrying out the separation patrol for all workplaces. As the recycling of paper sacks for glass materials got on track, the recycling rate of 94.9% was achieved in FY2011.In FY2012, we will make efforts, raising the target values to the next level.

Separation, reduction, and recycling of plastic

Separation, reduction, and recycling of paper waste

Recycling rate of plastic Recycling rate of paper

Recycling rate of plastic and paper

Implementation of Environmental Education

1919

E n v i r o n m e n t a l P r o t e c t i o n

Environmental Protection

Electricity (crude oil equivalent kℓ) 　City gas (crude oil equivalent kℓ)Electricity (crude oil equivalent kℓ) 　City gas (crude oil equivalent kℓ)

CO2 emissions Water resource use

Electricity and gas use (crude oil equivalent)

per unit sales (kℓ/million yen)　per unit sales (kℓ/million yen)　

Breakdown of energy use (charge basis)

29,86231,829

21,039

31,575 30,916

CO2 emissions (t-CO2) 　 　　 per unit sales (t-CO2/million yen)

Gas 33.8% Electricity60.9%

Water 2.1%Other 3.2%

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

56,18358,805 55,867

38,618

49,494

（m3）2.50

2.00

1.50

1.00

0.50

0.00

(t-CO2/million yen)35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

1.381.29 1.47

1.43 1.31

（t-CO2）

25,000

20,000

15,000

10,000

5,000

0

1.5

1.0

0.5

0.02007 20092008 2010 2011 　　 (FY)

2007 20092008 2010 2011　　(FY)2007 20092008 2010 2011　　(FY)

12,382 13,2519,612

13,206

18,54819,670

13,186

19,55819,322

6,1666,419

3,574

6,352

（kℓ） （kℓ/ million yen)

0.8570.797

0.924 0.888

13,442

5,8800.822

Efforts for Reducing Environmental Load

Efforts for Energy and Resource ConservationGlass manufacturing consumes much energy (in the form of electricity and city gas). The amount of energy use has been increasing since 2003 with augmentation of production facilities. On the other hand, energy consumption per unit (energy use per unit of production volume) has been decreasing every year since 2007 owing to the introduction of energy saving type furnaces.During 2009, influenced by the recession caused by Lehman Shock, production declined widely and energy use diminished greatly.Energy consumption per unit, however, slightly increased due to inefficiency in production.

Production started to recover in the middle of 2010, and energy consumption per unit has shown a declining tendency. In FY2011, influenced by the Great East Japan Earthquake on March 11, it became temporarily difficult to continue production in a stable manner. However, it did not lead to the deterioration in energy consumption per unit, and we could keep it at the same level as the previous year. Apart from efforts in the production division, the energy saving promotion committee mainly patrols back-office divisions to check the management of temperature of air conditioners, and energy saving in lighting and office equipment. As a result, employees' awareness of energy saving has increased.

2020

Waste disposal most accounts for the greatest percentage of environmental cost.Glass waste disposal cost has a large percentage of the waste disposal cost.OHARA classifies glass waste into six types. One of them is optical glass containing tantalum, which is a rare metal.Tantalum is an expensive substance and its price is on a rising trend even now. For several years, OHARA has been consigning re-refining of glass waste containing tantalum to a raw material supplier for reusing raw materials extracted from such glass waste. OHARA is thus making a continuous effort for effectively using limited resources.We also strive to reduce glass waste by increasing the proportion of recycled glass.

Environmental management covers a wide variety of matters. Many items of cost are thus incurred including costs for installing and maintaining anti-pollution equipment as well as for waste disposal.It goes without saying that the incursion of wasteful cost should be avoided by grasping the costs for environmental management, but such an occurrence of the future environmental risk must not be allowed that results from the failure to lay out a necessary expense.Consequently, we accurately grasp the cost effectiveness of each action for environmental management to render it effective and free of wasteful cost.Waste disposal cost has come to account for a larger percentage of environmental cost. Therefore, a reduction in waste is taken up as one of environmental goals, and waste reducing activities are being promoted.

Environmental Protection Cost

Concrete landfillSimple landfillLandfill after volume reductionHeat recovery

Recycling after volume reductionRecycled resourcesValuable (useful) materials

* Volume reduction: Reducing volume of wastes

100

80

60

40

20

02007 2008 2009 2010 2011 （KY）2.6 4.3 4.9 1.9

1.3 1.2 1.5 0.8

1.4 1.3 0.3 0.2

38.9 35.4 31.0 31.1

20.7 21.6 22.4 22.1

35.1 36.239.9 43.9

3.8

1.4

0.2

41.0

11.6

41.9

(%)250,000

200,000

150,000

100,000

50,000

0

OtherEnvironment improvement costAnti-pollution cost

Environment analysis costPremises cleanup costWaste disposal cost

2007 2008 2009 2010

（thousand yen）

219,653

127,264

79,874

104,731

2011 （KY）

116,710

Waste Disposal Breakdown

Thoroughly separating glass from waste

Environmental Protection

Energy saving leads directly to CO2 reduction. OHARA is promoting energy use reduction through energy saving activities under its environmental program and activities by Energy Saving Promotion Committee.Energy Saving Promotion Committee is facilitating activities to eliminate wasteful use of energy and enhance awareness of energy saving, focusing on an energy saving patrol once a month. In summer of FY2011, the restriction on the use of electricity was exercised in accordance with Article 27 of Electricity Business Act. OHARA overcame the difficulty without exceeding limitations on use of electricity by taking various energy saving measures, for example, restricting use of air conditioners with thorough management of room temperature, introducing Cool Biz style, and applying heat shield film to windowpanes.

Efforts of Energy Saving

Environmental Protection Cost

Reduction and Recycling of Waste in Production Process

2121

I te m s F Y 2011 E nv i r o n m e nt a l Ta r g e t s Ac t i v i t y D e s c r i p t i o n Ac t i v i t y Re s u l t s Target Achievement F Y 2012 E nv i r o n m e nt a l Ta r g e t

Reducing and recycling waste

Reduce waste glass per unit by 3% by October 2011 (relative to 2008)

The production of optical glass and special glass generates a variety of waste glass, ranging from defective products to waste glass resulting from a change in the type of products manufactured. Efforts are being made to improve the product yield, reduce initial defects upon product type changeover, recycle waste glass, and reduce excess inventory by improving information accuracy.

In FY2011, supported by good conditions to receive orders, the volume of waste glass temporarily increased due to the disaster on March 11. As heat retention due to repair and halt of furnaces, and defects in quality at start-up resulted in an increase in waste glass, waste glass per unit increased 5%.

Objective: Reduce waste glass per unit by 3%) (relative to 2011)Target: Reduce waste glass per unit by 1% (relative to 2011)

We will continue to conduct activities to efficiently change types of products, and improve product yield in order to prevent the generation of waste glass. With effective reuse and recycling, we will reduce the volume of waste glass.

Energy conservation Reduce energy consumption per unit by 3% by October 2011 (relative to FY2008)

Melting glass at high temperature is indispensable for glass manufacturing. This consumes a large amount of gas and electrical energy. Efforts are being made to increase efficiency, including enhancing energy efficiency of equipment in various processes, improving the product yield, and preventing troubles.

In FY2011, as production volume decreased due to heat retention during winter holidays and influence of the Great East Japan Earthquake, energy consumption per unit deteriorated. Although energy consumption per unit improved with full-scale production in and after May, it deteriorated again with an increase by 0.5% owing to heating a tank furnace at low temperature at the end of June.

Objective: Reduce energy consumption per unit by 3% (relative to 2011)Target: Reduce energy consumption per unit by 1% (relative to 2011)

We will promote activities aiming to achieve the goal shown above. Energy-saving equipment and lighting systems will systematically introduced at the time of renewal.

Harmony with Environment in Local

Communities

Par ticipation in ac tivit ies for local environment conservation

・Participate in the Sagamigawa Cleaning Campaign　Have 13% or greater of the entire personnel (excluding temporary

workers) participate in the campaign・Participate in other environmental protection activities

Sagamigawa which originates in Yamanaka Lake and runs through Yamanashi prefecture and Kanagawa prefecture to Sagami Bay creates rich natural environment around the western part of Sagamihara city, which is a place of relief for citizens.In order to protect this rich nature, cleanup work along the river bed is implemented in spring and fall every year. OHARA has cooperated in this activity with 100 employees per year (12.8%) participating in it. In addition, OHARA takes part in the Street Cleanup Campaign, social action programs hosted by other companies, and environmental seminars, etc.

・Participate in the Sagamigawa Cleaning Campaign　Have 13% or greater of the entire personnel (excluding

temporary workers) participate in the campaign・Par t ic ip ate in other env ironment al prote c t ion

activities(Street Cleanup Campaign, etc.)・Participate in environmental seminars

Greening Company Premises (for beauty of landscape)

・Increase green areas in the Company premises by 100m2 or greater・10 or greater weeding sessions at the Company premises per year

From May to October, weeding sessions at the Company premises were implemented at lunch hour (except rainy weather). A total of 242 employees took part in 11 sessions.

・Increase green areas in the Company premises by 100m2 or greater

・10 or greater weeding sessions at the Company premises per year

Conduct a "No Car Day" campaign to reduce CO2 emissions by 18t annually

・Conduct activities for enhancing the awareness of "No Car Day" campaign

・Have each department submit a report on one fixed day every month

The number of employees commuting by car decreased compared to the beginning. As heat wave and bad weather continued in summer, the target was not achieved even with a reduction in CO2 emissions by 13.7t per year.

Conduc t a "No Car Day" campaign to reduce CO2 emissions by 15t annually

Contribution to global environment

improvement

Development and supply of products contributing to global environment improvement

・Promotion of commercialization of products contributing to environment improvement, energy conservation, and more efficient use of energy

Progress management of development of solid secondary battery components and glass mold lens was implemented. As a result, it was found to be slightly behind schedule.

Promote commercialization of solid secondary battery components and glass mold lens, and create new projects.

Enhancing Awareness of Environmental

Protection

Separation, reduction, and recycling of plastic wastes

・Carry out a campaign for separating, reducing and recycling plastic waste (including weighing plastic waste) to achieve the eco plastic rate of 75% or greater

・I d e nt i f y p ro b l e ms an d t ake a c t i o ns in c lu din g th os e fo r enlightenment

We managed to achieve a reduction in the total plastic waste and the eco plastic (material-recycled and heat-recycled plastic) rate of 78.2%.

・Carry out a campaign for separating, reducing and recycling plastic waste (including weighing plastic waste) to achieve the eco plastic rate of 75% or greater

・Continue activities to donate the caps of PET bottles (vaccine fund raising) and engage in activities to donate empty can pull tabs (wheelchair fund raising)

Separation, reduction, and recycling of paper waste

・Carry out a campaign for separating, reducing and recycling paper (including weighing) to achieve recycling rate of 90% or greater

・Awareness-raising activities to reduce copy paper use

We promoted separation, reduction, and recycling of paper waste as well as recycling of glass material sacks, to achieve the recycling rate of 94.9%.

Carry out a campaign for separating, reducing and recycling paper (including weighing) to achieve recycling rate of 95% or greater.

Strengthening the system for managing the chemicals in products

・Offer educational class 5 or greater times/year・Develop and promote products with low environmental loads・Make the lead-free rate for newly developed or improved products

100%, and the arsenic-free rate 80% or greater・Review and/or revise the materials procurement specifications for

127 substances

・Educational class on the management of the chemicals in products was offered 6 times.・To promote the development of products with low environmental load, information

obtained from customers and other sources was fed back to the Company. ・New or improved optical glass products were made 100% lead-free and 100% arsenic-free. ・Although the materials procurement specifications were reviewed as needed, the target

concerning the number of substances to be reviewed was not achieved.

・Continuously offer educational class 5 or greater times/year・Develop and promote produc ts contr ibuting to

improvement in global environment・Make the lead-free rate for newly developed or improved

products 100%, and the arsenic-free rate 100%

E n v i r o n m e n t a l P r o t e c t i o n

Environmental Protection

FY2011 Environmental Targets/Activity Descriptionsand FY2012 Environmental Objectives and TargetsThe environmental target in FY2011 was not completely achieved due in part to production affected by temporary halt of power and gas supply caused by the influence of the Great East Japan Earthquake. In FY2012, setting new environmental objectives and targets, we will be committed to achievement of them all together.

2222

Environmental Protection

I te m s F Y 2011 E nv i r o n m e nt a l Ta r g e t s Ac t i v i t y D e s c r i p t i o n Ac t i v i t y Re s u l t s Target Achievement F Y 2012 E nv i r o n m e nt a l Ta r g e t

Reducing and recycling waste

Reduce waste glass per unit by 3% by October 2011 (relative to 2008)

The production of optical glass and special glass generates a variety of waste glass, ranging from defective products to waste glass resulting from a change in the type of products manufactured. Efforts are being made to improve the product yield, reduce initial defects upon product type changeover, recycle waste glass, and reduce excess inventory by improving information accuracy.

In FY2011, supported by good conditions to receive orders, the volume of waste glass temporarily increased due to the disaster on March 11. As heat retention due to repair and halt of furnaces, and defects in quality at start-up resulted in an increase in waste glass, waste glass per unit increased 5%.

Objective: Reduce waste glass per unit by 3%) (relative to 2011)Target: Reduce waste glass per unit by 1% (relative to 2011)

We will continue to conduct activities to efficiently change types of products, and improve product yield in order to prevent the generation of waste glass. With effective reuse and recycling, we will reduce the volume of waste glass.

Energy conservation Reduce energy consumption per unit by 3% by October 2011 (relative to FY2008)

Melting glass at high temperature is indispensable for glass manufacturing. This consumes a large amount of gas and electrical energy. Efforts are being made to increase efficiency, including enhancing energy efficiency of equipment in various processes, improving the product yield, and preventing troubles.

In FY2011, as production volume decreased due to heat retention during winter holidays and influence of the Great East Japan Earthquake, energy consumption per unit deteriorated. Although energy consumption per unit improved with full-scale production in and after May, it deteriorated again with an increase by 0.5% owing to heating a tank furnace at low temperature at the end of June.

Objective: Reduce energy consumption per unit by 3% (relative to 2011)Target: Reduce energy consumption per unit by 1% (relative to 2011)

We will promote activities aiming to achieve the goal shown above. Energy-saving equipment and lighting systems will systematically introduced at the time of renewal.

Harmony with Environment in Local

Communities

Par ticipation in ac tivit ies for local environment conservation

・Participate in the Sagamigawa Cleaning Campaign　Have 13% or greater of the entire personnel (excluding temporary

workers) participate in the campaign・Participate in other environmental protection activities

Sagamigawa which originates in Yamanaka Lake and runs through Yamanashi prefecture and Kanagawa prefecture to Sagami Bay creates rich natural environment around the western part of Sagamihara city, which is a place of relief for citizens.In order to protect this rich nature, cleanup work along the river bed is implemented in spring and fall every year. OHARA has cooperated in this activity with 100 employees per year (12.8%) participating in it. In addition, OHARA takes part in the Street Cleanup Campaign, social action programs hosted by other companies, and environmental seminars, etc.

・Participate in the Sagamigawa Cleaning Campaign　Have 13% or greater of the entire personnel (excluding

temporary workers) participate in the campaign・Par t ic ip ate in other env ironment al prote c t ion

activities(Street Cleanup Campaign, etc.)・Participate in environmental seminars

Greening Company Premises (for beauty of landscape)

・Increase green areas in the Company premises by 100m2 or greater・10 or greater weeding sessions at the Company premises per year

From May to October, weeding sessions at the Company premises were implemented at lunch hour (except rainy weather). A total of 242 employees took part in 11 sessions.

・Increase green areas in the Company premises by 100m2 or greater

・10 or greater weeding sessions at the Company premises per year

Conduct a "No Car Day" campaign to reduce CO2 emissions by 18t annually

・Conduct activities for enhancing the awareness of "No Car Day" campaign

・Have each department submit a report on one fixed day every month

The number of employees commuting by car decreased compared to the beginning. As heat wave and bad weather continued in summer, the target was not achieved even with a reduction in CO2 emissions by 13.7t per year.

Conduc t a "No Car Day" campaign to reduce CO2 emissions by 15t annually

Contribution to global environment

improvement

Development and supply of products contributing to global environment improvement

・Promotion of commercialization of products contributing to environment improvement, energy conservation, and more efficient use of energy

Progress management of development of solid secondary battery components and glass mold lens was implemented. As a result, it was found to be slightly behind schedule.

Promote commercialization of solid secondary battery components and glass mold lens, and create new projects.

Enhancing Awareness of Environmental

Protection

Separation, reduction, and recycling of plastic wastes

・Carry out a campaign for separating, reducing and recycling plastic waste (including weighing plastic waste) to achieve the eco plastic rate of 75% or greater

・I d e nt i f y p ro b l e ms an d t ake a c t i o ns in c lu din g th os e fo r enlightenment

We managed to achieve a reduction in the total plastic waste and the eco plastic (material-recycled and heat-recycled plastic) rate of 78.2%.

・Carry out a campaign for separating, reducing and recycling plastic waste (including weighing plastic waste) to achieve the eco plastic rate of 75% or greater

・Continue activities to donate the caps of PET bottles (vaccine fund raising) and engage in activities to donate empty can pull tabs (wheelchair fund raising)

Separation, reduction, and recycling of paper waste

・Carry out a campaign for separating, reducing and recycling paper (including weighing) to achieve recycling rate of 90% or greater

・Awareness-raising activities to reduce copy paper use

We promoted separation, reduction, and recycling of paper waste as well as recycling of glass material sacks, to achieve the recycling rate of 94.9%.

Carry out a campaign for separating, reducing and recycling paper (including weighing) to achieve recycling rate of 95% or greater.

Strengthening the system for managing the chemicals in products

・Offer educational class 5 or greater times/year・Develop and promote products with low environmental loads・Make the lead-free rate for newly developed or improved products

100%, and the arsenic-free rate 80% or greater・Review and/or revise the materials procurement specifications for

127 substances

・Educational class on the management of the chemicals in products was offered 6 times.・To promote the development of products with low environmental load, information

obtained from customers and other sources was fed back to the Company. ・New or improved optical glass products were made 100% lead-free and 100% arsenic-free. ・Although the materials procurement specifications were reviewed as needed, the target

concerning the number of substances to be reviewed was not achieved.

・Continuously offer educational class 5 or greater times/year・Develop and promote produc ts contr ibuting to

improvement in global environment・Make the lead-free rate for newly developed or improved

products 100%, and the arsenic-free rate 100%

Target achievement status: =100% =75 〜 99% =75%or less

Note: Objectives and targets indicate values per unit of production respectively in FY2014 and FY2012.

2323

OHARA upholds "respect for human rights and prohibition of discrimination" as follows in the Code of Conduct: Guidelines. "No person working for OHARA is discriminated on the ground of race, nationality, sex, age, origin, physical disability, or any other reason unrelated to the execution of business. Slander, libel, harassment, intimidation, or any other speech or conduct that neglects human rights and dignity of an individual shall be strictly refrained from so that no one may feel disagreeable."

When a corporate ethics problem occurs, the department head will respond to the request for advice (or report) from a consulting person (or informer) and quickly take an appropriate action, in principle. An internal reporting (Help Line) system, however, has been established for the consulting person (informer) to report directly to the Ethics and Compliance Committee for cases where that is dif f icult to report directly to a division head for some reason. In addition to the Personnel Section, which serves as an internal contact, corporate attorneys for OHARA accepts an internal report as an external contact. Women staff are in charge of the external contact to strengthen the reporting function for accusations of sexual harassment and other relevant problems.

For corporate continuous development, it is necessary to continue to reform business and organizations by forecasting and promptly responding to changes in external environments. The reform, however, cannot be attained only by changing business and organizations.In order to achieve the reform, each employee should grow and become a core of the reform so as to accomplish the OHARA Group's growth and prosperity. Therefore, OHARA aims to develop human resource independent from the organizations.

In addition to anniversary year training by age starting from newcomer's training (education for young employees, employees who reached thirty, forty, and fifty years of age), OHARA has in place a educational system incorporating specialized programs related to each employee (management training).

Outline of Employee Education

① Advanced Management TrainingEvery year, an education and training camp is held outside the company for employees who have been newly appointed as general manager or deputy general manager of a division and those who have been newly promoted to any other position of the same rank.

② Intermediate Management TrainingEvery year, an education and training session is given by inviting lecturers for employees who have been newly appointed as manager or assistant manager (including a manager-equivalent position) of a section and those who have been newly promoted to any other position of the same rank.

③ Introductory Management TrainingEvery year, an education and training session is given by inviting lecturers for employees who have been newly appointed as sub-manager or assistant sub-manager and those who have been newly promoted to any other position of the same rank.

④ Young Employees TrainingIn principle, employees who joined OHARA as new graduates and have worked for OHARA for three years are subject to this program. This is intended to motivate young employees of this period in life who may have started to have awareness as adults but may tend to get slack and have them acquire basic skills for their job. This training session is administered inside the company by inviting lecturers.

⑤ Anniversary Year Training (Career Training)The training session was offered to employees who reached thirty years of age in FY2010, and forty years of age in FY2011. As an occasion to look back on one's life and think about what one intends to do in the future, this session is held inside the company by inviting guest lecturers. In FY2012, the anniversary year training is planned to be given to those who reached fifty.

E m p l o y e e r e s p e c t

Employee respect

The human rights and individual personalities of our employees will be observed and protected. Comfortable working conditions must be arranged. Through an open and fair atmosphere in our work place, we will be able to create solid corporate principles.

Ethics and Compliance Committee Secretariat (General Affairs Division)

③Report of Reported Contents

When a committee meetingmust be convened

Investigation/Direct of corrective measures

⑨Report to informer

②Reception ①Report ②Reception

Informer

Informer

Contact

Ethics and Compliance Committee

④ Conduct and record an investigation

⑤ Study corrective measures

⑥ Implement corrective measures

⑦ Verify results of corrective measures ⑧ Report to contact

External contact(Corporate Attorney)

Internal contact(Personnel Section)

Our Conception of Human Rights Our View on Human Resource Development

Outline of Employee EducationInternal Reporting (Help Line) System

Efforts for Human Rights OHARA's Human Resource Development

2424

OHARA started a company-wide campaign for "Zero Overtime" and "100% Leaving Work on Time" in November 2006. One of the objectives of this campaign is to "achieve a good work-life balance." Work supports our livelihood and gives us joy and something to live for, but at the same time house duties, child rearing, and socializing with our neighbors are indispensable parts of our lives. The accomplishment of "bonds" and "ties" would double motivation and delight in life. In actuality, however, we often become overburdened with work, and the resulting mental and physical fatigue affects our health. Some of us may be worried about reconciling work and child care or care giving. There are thus many who have problems between work and our private lives. To prevent our employees from falling into such situations, OHARA aims for a "Full Life" (work-life balance).

The source of competitiveness in the manufacturing industry is productivity, which is driven by the performance of each employee. Therefore, manufacturing and administrative overhead departments of OHARA are respectively making efforts for improving "manufacturing efficiency" and "operational efficiency", and the entire company is thus together striving to improve productivity. To grow into a strong company that will not lose out in competition with other companies, it is necessary to pursue "creating greater value added with less labor input" as a target. Recently, activities for improving operational efficiency are often proposed in external seminars and symposiums on work-life balance. OHARA has made efforts for more efficient operation on a daily basis under the same themes as proposed, i.e., "the concept of business improvement", "identifying waste" and "time management". In this way, "efforts for improving operational efficiency" have contributed to not only "cost-cutting", but also "growing in a strong company which would not lose to competitors", "keeping a good work-life balance" and other various aspects. Accordingly, OHARA will continue the efforts as

important activities so as to survive in Japan.

OHARA supports employees who are working while raising their children by improving the schemes for child care leave and shorter work hours for child care (until their children enter elementary school). In order to enable as many employees as possible to use the Child Rearing Support System, OHARA has paid wages for reduced work hours (1 hour) since the scheme for shorter working hours was introduced. OHARA made that significant decision when many companies (89.6%) did not pay wages for the reduced hour. In FY2011, appreciated in relation to the efforts for paying wages for the reduced hour ahead of other companies, OHARA was commended as a "company supporting and promoting a good work-life balance" by Sagamihara city.

OHARA has a scheme for reemploying individuals who have mandatorily retired. Many of the mandatory retirees are "mentally and physically healthy" and have high "operational ability", even after leaving the company at age 60.Through the reemployment scheme, expertise and skills would be passed to juniors. The number of those who are reemployed is increasing year by year. In FY2011, 6 persons were reemployed.

Creating a Comfortable Working Environment

2007 2008 2009 2010 （FY）

21

25

16

8

0

5

10

15

20

25

30

35

（persons） （persons）

40

Number of employeestaking child care leave

Number of employeesusing the scheme for shorterwork hours for child care

2008 2009 2010 （FY）

25

21

2011

34

2011

28

15

0

5

10

15

20

25

30

35

Employee respect

Employee taking child care leaveSaori Kudo, Personnel Section

Employee using the reemployment schemeEisuke Muramatsu,Environmental Safety Section

Idea of Work-life Balance

Reemployment Scheme

Activities for Improving Operational Efficiency

Child Rearing Support System

I have used a short-time working system since the previous year. Until returning to work, I felt anxiety about keeping a balance between work and child care/domestic affairs. After resuming work, my colleagues at workplace were kind and supported my job. Able to take advantage of the reduced working hours for preparation and transportation to and from a day-care center, I think I have been able to deal with my roles both as a mother and a company employee at the same time with a sense of self-composure. Not all companies have the "childcare leave system" and the "scheme for shorter work hours". I would like to do my best to raise a child and work in the future, appreciating OHARA's excellent environment to raise children.

I reached mandatory retirement age in September 2010. After that, using the reemployment scheme, I have continued to work for OHARA for two years. As I am working in the same workplace as I worked before, I can use my experience and expertise without drastic changes in working environment and human relationships. As a result, I can keep my motivation for work high. Now, I am enjoying my second career without a critical obstacle, keeping a good balance between work and my second life. Careful about my health, I will do my best to work so as to contribute to OHARA.

2525

As an optical glass manufacturer, OHARA possesses melting furnaces and uses them in production for 24 hours a day. As the furnace temperature reaches 1,200 ℃ - 1,400 ℃ during the optical glass melting process, the working environment is severe due to high temperature during summer. As a countermeasure against "heat stroke", one of labor accidents which frequently occur in summer, OHARA star ted working environment measurement in FY2009, and took measures such as installing "spot coolers" and "fans", as well as encouraging employees to wear cooling ties in FY2010.In FY2011, skylights were repaired to open and "salty supplements" to prevent heat stroke were given to employees. We will put emphasis on improvement in working environments for employees.

With an eye to reducing the number of employees suffering from metabolic syndrome and potential sufferers, OHARA has interviews with all employees when they receive the result of medical check-up. For the health management of employees stationed abroad, we regularly deliver questionnaires about their degree of fatigue, and we investigate the tendency of fatigue and workloads as countermeasures against excessive work. If there are any problems, an interview with an industrial doctor is arranged, and recommendations to the company are made. As PR activity, an article titled "Healthy OHARA" is placed in OPTPIA, a company newsletter, and a health-related newspaper is issued on a regular basis.In FY2011, a "seminar on pelvic exercises" was held as an event for health week, in which a lot of participants performed exercises to correct the distortion of the body and eliminate stiffness.

Improving Working Environment Health Maintenance Activity Support

Before repair: Skylights n e a r a ro o f f a n , t h e windows of which were dirty and dark, and could not be opened.

After repair: as windows of skylights became able to open and close, it became brighter and hot air is ventilated out in summer.

E m p l o y e e r e s p e c t

Employee respect

Disaster drill

OHARA holds a company-wide disaster drill every year so that our employees can take a prompt action in case of a disaster. In FY2011, triggered by the Great East Japan Earthquake, we conducted early-stage fire fighting training by local security fire-fighters and first responder training by CE* security staff on the premise of occurrence of an earthquake above level 5, using an earthquake early warning.In addition, fire extinguisher training using a water extinguisher together with cardiopulmonary resuscitation training using an AED were administered for employees. We will continue to strengthen crisis management.

Ties with former employees

OHARA will mark the 76th anniversary of its foundation in Kamata, Tokyo.OHARA's long history has been built up by a lot of seniors and come down to present employees. Several retired employees were hoping to have an opportunity to gather with all other former employees. In response to the request, OHARA launched an ex-employees organization named "Kojukai". The name of organization derives from "optics", a base of the Company, and a big "tree" representing prayer for prolonged growth. In November 2011, the first big social gathering was held with a lot of participating members.

TOPICSTOPICS

* CE: Equipment for high-pressure gas such as liquefied oxygen

Efforts for Occupational Safety and Health

Training for cardiopulmonary resuscitation using AED

2626

C o r p o r a t e p r o f i l e

OHARA INC.ASHIGARA OPTICAL INC.OHARA PRECISION CORPORATION

Ohara Corporation (East Office) (USA)

Ohara Corporation (West Office) (USA)

OHARA OPTICAL (HONG KONG) LTD. (Hong Kong)

OHARA OPTICAL (ZHONGSHAN) LTD. (China)

NHG-OHARA OPTICS (XIANGYANG) CO., LTD. (China)

TAIWAN-OHARA OPTICAL CO., LTD. (Taiwan)

OHARA OPTICAL(M)SDN.BHD (Malaysia)

OHARA GmbH (Germany)

OHARA DISK(M)SDN.BHD (Malaysia)

OHARA Quartz Co., Ltd.

Group Companies

Corporate Profile (As of October 31, 2011)

Company Name: OHARA INC.Address: 15-30, Oyama 1-chome, Chuo-ku, Sagamihara, Kanagawa, Japan 252-5286 TEL: (81)42-772-2101 (Reception) FAX: (81)42-774-1071 Established October 1, 1935Capital: 5,855 million yenManufacture and sale of glass materials for optical and electronics applications.Number of Employees:　 426 (2,576 for the entire Group)

Products

● Optical Business　・Optical glass/Eco-Optical Glass　・Low Tg optical glasses for glass mold lens ● Electronics Business　・Glass-ceramics for HDD　・Ultra low expansion glass-ceramics (CLEARCERAMTM-Z)　・i-line high homogeneity glass　・Glass-ceramic substrate for DWDM thin-film filter (WMSTM-15)　・Fiber glasses for light guide　・Glass disk for Magnetic Head Flying Height Tester (GD-FHTTM)　・Glass for Art　・Lithium-ion conductive glass-ceramics (LI CGCTM): Development Products　・Measurement service on glasses/ceramics　・Synthetic quartz glass　・Ultra precision surface grinding

Stock Information (As of October 31, 2011)

● Total number of authorized shares: 76,000,000 ● Total number of issued shares: 25,450,000 ● Number of shareholders: 4,954 ● Major shareholders

Other domestic corporations67.2％

Treasury Stock 4.4％ Securitiescompanies0.2％

Foreign companies, etc. 7.2％

Financial institutions 8.5％

Individuals, etc. 12.5％

　 Name Number of shares held Investment ratio (%)

1 Seiko Holdings Corporation 4,702,722 19.33%

2 Canon Inc. 4,694,380 19.30%

3 Kyobashi Kigyo Kabushiki Kaisha 4,688,400 19.27%

4 Sanko Kigyo Kabushiki Kaisha 1,638,300 6.73%

5 Topcon Corporation 673,600 2.77%

6 Seiko Instruments Inc. 610,000 2.51%

7 Japan Trustee Services Bank, Ltd. (trust account) 552,500 2.27%

8 Mizuho Bank, Ltd. 500,000 2.06%

9 State Street Bank and Trust Company 448,700 1.84%

10 The Master Trust Bank of Japan, Ltd. (trust account) 413,300 1.70%

(Note) Treasury stock (1,124,372 shares) is deducted in calculating investment ratio.

SalesOperating income

Net incomeEarnings per share

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

△5,0002007 2008 2009 2010 2011 （KY）

2007 2008 2009 2010 2011 （KY）

19,490

27,456

30,57428,248 28,659

(million yen）

6,000

5,000

4,000

3,000

2,000

1,000

0

△1,000

△2,000

500

400

300

200

100

0

△100

△200

(million yen） （yen）

7,074 6,372

3,2751,644

△605

4,790

3,915

1,963

866

△1,848

80.72

35.60

△75.98

158.19188.19

Transition of earnings

Transition of net income

(Note) After retroactive adjustment for stock splits.

30

25

20

15

10

5

02007 2008 2009 2010 2011（KY）

(yen)

(Note) After retroactive adjustment for stock splits.

Transition of dividend per share

25 25

15

20 20

Corporate Profile

2012Corporate Social Responsibility Report 2012

Issued in January 2012

As a printing process, waterless printing,which does not generate harmfulwaste water, is used.

Waterless PrintingVegetable oil ink is used in order to reducethe generation ofVOC (volatile organic compounds)that causes air pollution.

Vegetable Oil Ink UsedFSC Certified Paper UsedThis report is made by using paper made fromwood taken from forests appropriatelymanaged in accordance with the strict standard.

CSR Report