Consolidated Five-Year Summary
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31
Japanese yen(millions)

FY2012For the year:
Net sales
Profit attributable to owners of parent

FY2013

FY2014

U.S. dollars(thousands)

FY2015FY2016FY2016

		
		
		
		
		
		
\ 202,236\ 234,262\ 256,011\ 268,752\ 266,121$ 2,372,063

9,722

12,268

9,503

12,013

13,855

123,496

At year-end:

		
		
		

		

		
		
		

		

Total assets\ 196,375\ 230,740\ 260,972\ 259,273\ 280,072$ 2,496,409

Current assets

97,723

114,306

122,941

121,420

135,142

1,204,584

Property, plant and equipment

88,590103,819

125,182

127,109

133,860

1,193,155

Current liabilities

38,734

48,32552,09355,49755,624495,804

Bonds and Long-term debt

14,904

19,15929,02021,62935,326

314,877

Net assets

135,710

155,930

170,326

173,526

180,069

1,605,038

Shareholders' equity ratio
Retained earnings

64.6 %
116,914

Profit attributable to owners of parent - diluted
Net assets

60.6 %
131,66860.1%

62.4 %
140,31860.1%

150,807		Japanese yen		Per share data:
Profit attributable to owners of parent

63.1 %
126,783

1,344,213
U.S. dollars\ 201.95\ 255.58\ 197.96\ 250.17\ 288.44

－

－

－

－

－

－

2,642.60

3,032.56

3,294.13

3,366.87

3,501.19

31.21

$

2.57

Note : U.S. dollar amounts are included solely for the convenience of readers, translated at the rate of  \ 112.19 to U.S. $1.00.

Financial Section
Consolidated Five-Year Summary

6

Consolidated Balance Sheets

7

Consolidated Statements of Income

9

Consolidated Statements of Comprehensive Income

10

Consolidated Statements of Changes in Net Assets

10Consolidated Statements of Cash Flows12

Notes to Consolidated Financial Statements

13

Independent Auditors' Report

33

Corporate Data

34

Annual Report 20176

Consolidated Balance Sheets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2016 and 2017
Japanese yen(millions)

ASSETS

FY2015

U.S. dollars(thousands)

FY2016FY2016

Current Assets:		
Cash and deposits (Notes 17 and 20)\

Notes and accounts receivable (Notes 6, 17 and 18)

45,523$ 405,773

48,53049,195438,498

13,10913,840123,369

31,975\Inventories (Notes 2 and 6) Finished goods
Work-in process

6,049

5,330

47,515

Raw materials and Supplies

11,12011,616

103,541

3,873

4,290

38,240

231

181

1,619

Other current assets

6,751

5,317

47,398

Allowance for doubtful accounts

(223)

(153)

(1,372)

121,420

135,142

1,204,584

Land

11,54911,925106,297

Buildings and structures, net

36,08939,876355,435

Machinery and vehicles, net

63,21060,898542,816

Tools and furniture, net

7,905

7,160

63,825Construction in progress

8,354

13,999124,781

127,109

133,860

1,193,155

Intangible assets

3,759

3,692

32,910Investments in securities (Notes 3, 4 and 17)

3,292

3,775

33,648

311

118

1,053

1,049

1,064

9,490

544

722

6,438

1,827

1,744

15,551

(40)

(47)

(423)

10,744

11,06998,669280,072$ 2,496,409

Deferred tax assets (Note 9)
Short-term loans to non-consolidated subsidiaries and affiliates

Total current assets						Property, Plant and Equipment (Notes 5 and 6):		

Total property, plant and equipment						Investments and Other Assets: 		Long-term loans to non-consolidated subsidiaries and affiliates
Asset for retirement benefits (Note 10)
Deferred tax assets (Note 9)
Other assets
Allowance for doubtful accounts
Total investments and other assets						
Total Assets		

The accompanying notes to the consolidated financial statements are an integral part of these statements.

7 Annual Report 2017\259,273\

Japanese yen(millions)

LIABILITIES AND NET ASSETS

FY2015

U.S. dollars(thousands)

FY2016FY2016

Current Liabilities:		
19,892$ 177,312

Short-term borrowings (Notes 6, 7 and 17)

9,751

11,609103,484

Current portion of bonds (Notes 7 and 17)

7,000

－

－

Accrued expenses (Note 17)

8,801

9,838

87,697

Accrued income taxes (Note 17)

1,839

3,506

31,258Provision for product warranties

1,399

2,880

25,675

Other current liabilities

7,439

7,895

70,37655,49755,624495,804

Bonds payable (Notes 7 and 17)－

10,00089,134Long-term debt (Notes 7 and 17)

21,62925,326

225,743

Long-term other accounts payable

356

218

1,950

Deferred tax liabilities (Note 9)

2,403

2,800

24,963Liability for retirement benefits (Note 10)

5,178

5,195

46,308

28

28

257

Notes and accounts payable (Note 17)

Total current liabilities\ 19,266\		Long-term Liabilities:		

Asset retirement obligations
Other long-term liabilities
Total long-term liabilities

653

808

7,209

30,25044,378395,566

8,284

8,284

73,840

7,564

7,559

67,381

140,318

150,807

1,344,213

		Contingent Liabilities (Note 18)		
		
Net Assets		
Shareholders' Equity:		
Common stock
Authorized - 168,000 thousand shares at March 31, 2016 and 2017
Issued - 48,593 thousand shares at March 31, 2016 and 2017
Capital surplus
Retained earnings
Treasury stock		568 thousand shares at March 31, 2016 and 553 thousand shares at March 31, 2017
Total shareholders' equity(1,444)(1,400)(12,483)

154,721

165,250

1,472,953

Accumulated Other Comprehensive Income		
920

1,164

10,380Foreign currency translation adjustments

6,224

1,736

15,476

Remeasurements of defined benefit plans (Note 10)

(172)

45

401

Total accumulated other comprehensive income

6,971

2,945

26,258

11,833

11,872

105,827

173,526

180,069

1,605,038

280,072$ 2,496,409

Valuation difference on available-for-sale securities

		
Non-controlling interests 						Total net assets

		
Total Liabilities and Net Assets		

\ 259,273\

Annual Report 20178

Consolidated Statements of Income
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2016 and 2017
Japanese yen(millions)

Net Sales 				
Cost of Sales 		Gross profit		Selling, General and Administrative Expenses				Packing and haulage expenses
Provision for product warranties
Provision of allowance for doubtful accounts
Director's remuneration, salary and other allowances
Welfare expense
Retirement benefit cost
Depreciation
Research and development expenses (Note 11)
Other, net
Total selling, general and administrative expenses
Operating income
		Non-operating Income: 		Interest income
Dividend income
Rent income
Income from sponsorship
Gains on sale of property, plant and equipment
Gains on sales of investment securities
Test consignment income
Share of profit of entities accounted for using equity method
Other, net
Total non-operating income
		Non-operating Expenses: 		Interest expense
Interest on bonds
Losses on sale or disposal of property, plant and equipment
Foreign exchange losses
Other, net
Total non-operating expenses
Ordinary Profit		Income before income taxes and non-controlling interests  		
Income Taxes (Note 9)		Current
DeferredProfit				
Profit attributable to non-controlling interests				Profit attributable to owners of parent		
		
Per Share Data (Note 15):		
Profit attributable to owners of parent
Profit attributable to owners of parent - diluted		
Cash dividends
The accompanying notes to the consolidated financial statements are an integral part of these statements.

9 Annual Report 2017

U.S. dollars(thousands)

FY2015FY2016\ 268,752$2,372,063\ 266,121
		
1,861,813
208,876
510,250
57,244				
53,550
6,007
21,8592,452
276
31
74,777
8,389
14,359
1,610
1,859
208
20,5672,307
51,374
5,763
74,781
8,389
313,406
35,161
196,843
22,083
		
		
1,448
162
577
64
1,202
134
2,191
245
637
71
697
78
342
38
2,674
300
8,881
996
18,652
2,092
		
		
8,554
959
402
45
3,679
412
9,418
1,056
8,070
905
30,126
3,379
185,370
20,796
		
185,370
20,796				
56,612
6,351(4,634)(519)
133,393
14,965
		
9,896
1,110
		
$ 123,496\ 13,855

214,152
54,600

6,349
1,125
－
8,721
1,765
172
2,296
5,374
7,488
33,29421,305

139
64
130
151
46
375
8
51
736
1,704

1,089
35
320
2,677
776
4,898
18,112
18,112

4,996
238
12,876863\ 12,013

Japanese yen\ 250.17
－
		
70.00

\ 288.44
－
		
80.00

FY2016

U.S. dollars
$

2.57
－
0.71

Consolidated Statements of Comprehensive Income
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2016 and 2017
U.S. dollars(thousands)

Japanese yen(millions)

Profit		FY2015FY2016FY2016\ 12,876\ 14,965

133,393

Other Comprehensive Income
(667)

244

2,178

Foreign currency translation adjustments(4,956)(5,005)(44,615)

Remeasurements of defined benefit plans

(185)

217

1,942

(4)

(5)

(50)

Valuation difference on available-for-sale securities

Share of other comprehensive income of associates accounted for the using equity method
Total other comprehensive income (Note 19)
Comprehensive Income		

(5,814)(4,548)

7,062\ 10,416

6,860

9,829

87,612

201

587

5,234

\

(40,546)$

92,846Comprehensive Income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes to the consolidated financial statements are an integral part of these statements.

Consolidated Statements of Changes in Net Assets
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2016 and 2017
Japanese yen (millions)Shareholders' Equity
CommonStock
Balance at April 1, 2015
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2016

\

8,284

CapitalSurplus\Retained
Earnings

7,556\ 131,668
12,013

7

\

8,284

\

7,564

Treasury
Stock
\

(1)
36

(3,363)\ 140,318(1,480)\(1,444)

Total
Shareholders'Equity\ 146,028
12,013(1)
44(3,363)\ 154,721

Japanese yen (millions)
Accumulated Other Comprehensive Income
Valuation
Foreign
Remeasurements Total Accumulated
Difference on
Currency
Otherof definedComprehensive
Available-for-saleTranslation
benefit plans
IncomeSecurities
Adjustments
Balance at April 1, 2015
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2016

Non-controllinginterests

\

1,587

\

10,524\12\

12,124\

12,172

\

(667)
920

\

(4,299)
6,224

\

(185)
(172)

\

(5,152)
6,971

\

(339)
11,833Total
net
Assets\ 170,326
12,013(1)
44(3,363)(5,492)\ 173,526

Annual Report 201710

Japanese yen (millions)Shareholders' Equity
CommonStock
Balance at April 1, 2016
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2017

\

8,284

CapitalSurplus\

7,564

Retained
Earnings\ 140,318
13,855

(4)

\

8,284

\

7,559

Treasury
Stock(1,444)\(0)
45(3,365)\ 150,807(1,400)\

Total
Shareholders'Equity\ 154,721
13,855(0)
40(3,365)\ 165,250

Japanese yen (millions)
Accumulated Other Comprehensive Income
Valuation
Foreign
Remeasurements Total Accumulated
Difference on
Currency
Otherof definedComprehensive
Available-for-saleTranslation
benefit plans
IncomeSecurities
Adjustments
Balance at April 1, 2016
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2017

Non-controllinginterests

\

920

\

6,224

\

(172)

\

6,971

\

11,833

\

244
1,164

\

(4,488)
1,736

\

217
45

\

(4,025)
2,945

\

39
11,872

Total
net
Assets\ 173,526
13,855(0)
40(3,365)(3,986)\ 180,069

U.S. dollars (thousands)
Shareholders' Equity
CommonStock
Balance at April 1, 2016
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2017$

73,840CapitalSurplus$67,421Retained
Earnings

Treasury
Stock$1,250,719
123,496$ (12,879)(39)$

73,840$67,381(6)402(30,002)$1,344,213$ (12,483)

Total
Shareholders'Equity$1,379,102
123,496(6)363(30,002)$1,472,953

U.S. dollars (thousands)
Accumulated Other Comprehensive Income
Valuation
Foreign
Remeasurements Total Accumulated
Difference on
Currency
Otherof definedComprehensive
Available-for-saleTranslation
benefit plans
IncomeSecurities
Adjustments
Balance at April 1, 2016
Profit attributable to owners of parent
Purchase of treasury stock
Disposal of treasury stock
Dividends of surplus
Other, net
Balance at March 31, 2017

$

8,201

$

55,480$(1,540)$62,142$ 105,472$

2,178
10,380$(40,004)
15,476

$

1,942
401

$

(35,883)
26,258354$ 105,827

The accompanying notes to the consolidated financial statements are an integral part of these statements.

11 Annual Report 2017

Non-controllinginterests

Total
net
Assets$1,546,717
123,496(6)363(30,002)(35,529)$1,605,038

Consolidated Statements of Cash Flows
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2016 and 2017
Japanese yen(millions)

Cash Flows from Operating Activities:
Income before income taxes and non-controlling interests
Adjustments for:
Depreciation and amortization(Gains) losses on sale or disposal of property, plant and equipment  
Increase (decrease) in allowance for doubtful accounts(Increase) decrease in asset for retirement benefits
Increase (decrease) in liability for retirement benefits
Increase (decrease) in provision for product warranties
Interest and dividend income
Interest expense(Increase) decrease  in notes and accounts receivables(Increase) decrease in inventories
Increase (decrease) in notes and accounts payables
Increase (decrease) in long-term other accounts payable
Other, net
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities:
Increase in time deposits
Decrease in time deposits
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for acquisitions of intangible assets
Payments for purchases of investment in securities
Proceeds from sales of investment securities
Payments for acquisition of consolidated subsidiaries involving changes in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash Flows from Financing Activities:
Increase (decrease) in short-term borrowings, net
Proceeds from long-term loans payable
Repayments of long-term loans payable
Issuance of bonds
Redemption of bonds
Payments for acquisitions of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (Note 20)

U.S. dollars(thousands)

FY2015FY2016FY2016\ 18,112\ 20,796$ 185,370

16,925274
95
77
84(1,551)(203)
1,124(3,296)
97
(529)
(68)
1,639
32,783244(1,104)(4,756)27,166

16,894
341
(60)
(14)
331
1,551
(228)
1,004
(2,224)(2,062)
1,758
(124)
4,783
42,746249(1,002)(4,683)37,309150,588
3,042
(535)
(133)
2,952
13,830(2,036)
8,957(19,831)(18,386)
15,673(1,110)42,636
381,0162,220(8,934)(41,741)
332,559(376)
40(24,344)
170
(841)
(13)
558
(961)
(4)
139
(103)
(25,737)(387)
10(27,988)228(1,313)
(32)
249
－
(0)
13
18
(29,203)(3,457)93(249,470)
2,036(11,711)
(287)
2,225
－
(8)
117
162
(260,299)

144
5,784
(4,782)－－(1)(3,363)(568)(15)(2,800)(777)(2,149)33,710\ 31,560(1,975)
12,697(3,813)
10,000(7,000)(0)(3,365)
(544)
(26)
5,970
(903)
13,17331,560\ 44,734(17,608)
113,182(33,995)
89,134(62,394)(6)(30,002)(4,855)(236)
53,218(8,054)
117,423
281,316$ 398,740

The accompanying notes to the consolidated financial statements are an integral part of these statements.

Annual Report 201712

Notes to Consolidated Financial Statements
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Summary of Significant Accounting Policies(a) Basis of presenting the consolidated financial statements(c) Translation of foreign currencies

The accompanying consolidated financial statements of EXEDY
Corporation (“the Company") and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in the
Financial Instruments and Exchange Act in Japan and its related
accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.

Monetary assets and liabilities denominated in foreign currency aretranslated into Japanese yen at current rates at each balance sheet
date and the resulting translation gains or losses are charged to income
for the current year.

The accounts of the Company’s overseas subsidiaries are preparedin accordance with either International Financial Reporting Standards
or the accounting principles generally accepted in the United States,and partially reflect the adjustments which are necessary to conform toJapanese GAAP. The accompanying consolidated financial statements
have been rearranged and translated into English from the consolidated
financial statements of the Company and its consolidated subsidiaries
prepared in accordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of Finance as requiredby the Financial Instruments and Exchange Act in Japan. Certain
supplementary information included in the statutory consolidated
financial statements prepared in Japanese, but not required for fairpresentation, is not presented in the accompanying consolidated
financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts
is included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2017, which was ¥112.19 to
U.S. $1.00. Such translation should not be construed as representations
that the Japanese yen amounts have been, could have been, or couldin the future be, converted into U.S. dollars at this or any other rateof exchange. Amounts are rounded down to the nearest million yen
and thousand dollars. Therefore, the total shown in the consolidated
financial statements and notes thereto do not necessarily agree with thesum of the individual account balances.

(b) Principles of consolidation
The accompanying consolidated financial statements include theaccounts of the Company and 36 (FY2015:35) significant subsidiaries
as of March 31, 2017, over which the Company has power of control
through majority voting rights or the existence of certain conditions
evidencing control by the Company.
Investments in 5 (FY2015:5) non-consolidated subsidiaries and 2(FY2015:2) affiliates as of March 31, 2017, over which the Company
has the ability to exercise significant influence over operating andfinancial policies of the investees, are accounted for using the equity
method.
In the elimination of investments in consolidated subsidiaries, the assets
and liabilities of the subsidiaries, including the portion attributable
to non-controlling interests, are measured at fair value at the time
the Company acquires control of the respective subsidiary. Materialintercompany balances, transactions and profits have been eliminatedin consolidation.
All the consolidated overseas subsidiaries, except for 2 subsidiaries,
EXEDY India Ltd. and EXEDY Clutch India Pvt. Ltd., have the fiscal
year ending December 31. Significant transactions occurring during theperiod between January 1 and March 31, the Company’s fiscal yearend, are adjusted for in the consolidated financial statements.

13 Annual Report 2017

The balance sheets of consolidated overseas subsidiaries are translated
into Japanese yen at the year-end rates except for shareholders' equity
accounts, which are translated at historical rates. Income statementsof consolidated overseas subsidiaries are translated at the average
rates during the year. Translation adjustments resulting from translating
financial statements whose accounts are denominated in foreign
currencies are not included in the determination of net income but arereported as “Foreign currency translation adjustments” in a componentof net assets and non-controlling interests.

(d) Securities
Securities consist principally of marketable and nonmarketable equity
securities. Available-for-sale securities with available fair value arestated at fair value. Valuation differences on available-for-sale securities
are reported, net of applicable income taxes, as a separate componentof net assets. Realized gains and losses on the sale of such securities
are computed using the moving average cost method. Available-for-salesecurities with no available fair value are stated at moving average cost.
If the fair value of available-for-sale securities declines significantly,
such securities are stated at fair value and the difference between thefair value and the carrying amount is recognized as a loss in the yearof decline. If the net asset value of available-for-sale securities withno available fair value declines significantly, such securities should be
written down to the net asset value by charging to income.

(e) Derivatives
All derivatives are stated at fair value.

(f) Inventories
Inventories held for sale except for supplies are mainly stated at thelower of cost (moving average method) or net realizable value at thebalance sheet date. Supplies are mainly stated at cost determined by
the last purchase cost method.

(g) Property, plant and equipment (excluding leased assets)
The Company and its domestic consolidated subsidiaries compute thedepreciation of property, plant and equipment by using the decliningbalance method and its overseas consolidated subsidiaries mainly byusing the straight-line method. The depreciation of buildings acquiredby the Company and its domestic consolidated subsidiaries on and after
April 1, 1998 is computed by using the straight-line method.
Estimated useful lives of property, plant and equipment are as follows:
Buildings and structures ........... 10 - 30 years
Machinery and vehicles …........ 7 - 20 years
Tools and furniture........... 4 - 7 years(h) Intangible Assets (excluding leased assets)
Intangible assets are amortized using the straight-line method. Software
for internal use is amortized using the straight-line method overestimated in-house working life of 3 to 5 years.

(i) Leases(r) Reclassification

Finance leases, except for certain immaterial leases, are capitalized
and depreciated using the straight-line method over lease terms, asapplicable.

Certain comparative figures have been reclassified to conform to thecurrent year’s presentation.

(j) Income taxes
The Company and its consolidated subsidiaries recognize the tax
effects of temporary differences between the carrying amounts of assets
and liabilities for tax and financial reporting purposes.
The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.

(k) Allowance for doubtful accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historicalbad debt ratio during a certain reference period plus the estimateduncollectible amount based on the analysis of individual accounts.

(l) Provision for product warranties
The Company and its consolidated subsidiaries provide for warranty
claim costs relating to quality of products. The provision is estimatedbased on historical warranty claims ratio and other individual conditions.

(m) Employees' severance and retirement benefits
The Company and its consolidated subsidiaries provide for employees'
severance and retirement benefits at the end of the fiscal year based on
the estimated amounts of projected benefit obligation and the fair valueof the plan assets at that date.
Actuarial differences are fully recognized in expenses in the year
following the fiscal year in which the actuarial differences are incurredor in the year in which they are incurred. Prior service costs are fullyrecognized in expenses in the year in which they are incurred.

(n) Accounting for consumption taxes
Consumption taxes withheld upon sale and consumption taxes paid by theCompany and its consolidated subsidiaries on their purchases of goods
and services are not included in the amounts of respective revenue, costor expense items in the accompanying consolidated statements of income.

(o) Per share data
The computation of net income per share is based on the weighted
average number of shares outstanding during each year, excluding theCompany’s treasury stock, and based on net income attributable tocommon stockholders, excluding bonuses to directors and corporate
auditors, etc. The computation of net assets per share is based on
the number of shares of common stock outstanding at the year-end,
excluding the Company’s treasury stock, and based on net assets
attributable to common stockholders, excluding non-controlling interests.
Cash dividends per share shown in the statements of income are theamounts attributable to the respective years.

(p) Goodwill
Goodwill, except for minor goodwill, is amortized by the straight-line
method over five years. Minor goodwill is expensed as incurred.

(q) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits andshort-term investments which have maturities of three months or lesswhen purchased, are easily convertible into cash and have little risk offluctuation in value.

(s) Additional information
Application of Implementation Guidance on Recoverability ofDeferred Tax Assets
The Company has applied the Revised Implementation Guidance on
Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26; March 28,2016) from the fiscal year ended March 31, 2017.
Application of the Practical Solution on Transactions of Delivering
the Company’s Own Stock to Employees etc. through Trusts
The Company conducts transactions of delivering its own shares to its
employees through a trust with the aim of improving employee welfare.
(1) Overview of transactions
At the Board of Directors meeting held on April 27, 2011, the Company
resolved the launch of “stock-granting Employee Stock Ownership Plan(“ESOP”)”, a trust-type employee incentive plan, for the purpose of
improving corporate value in the medium-and-long term by promoting
management that aims to enhance stock value as well as further
improvement in employee motivation and willingness to participate inmanagement. The Company instituted the plan on May 16, 2011.
A Trust is established by the company in which its employees whomeet certain requirements are the beneficiaries and the Company
contributes the amount required to purchase its own shares to the Trust.
Mitsubishi UFJ Trust and Banking, Ltd. (stock-granting ESOP trust
account) purchases the number of shares expected to be delivered toour employees from the Company by the third-party allotment according
to a rule for granting shares.
According to the rule for granting shares, the Trust delivers theCompany’s shares to the employees with no charge during the periodsof services, based on the employees’ promotion and appointment as
management positions during the period of trust.
As the Company contributes the full amount required for the Trust topurchase its own shares, the employees pay no costs. Because thelaunch of the Trust enables the employees to receive economic benefits
from increase in the Company’s stock price, improvement in employee
motivation can be expected. Also, exercise of voting rights related to theCompany’s shares categorized as trust assets of the Trust should reflect
the employees’ intentions as candidates for beneficiaries in this scheme,
and it is effective as a plan for enhancing corporate value to promote
employees’ participation in management.
(2) The Company has applied the "Practical Solution on Transactions ofDelivering the Company's Own Stock to Employees etc. through Trusts"(ASBJ PITF No.30, March 26, 2015); however, it is accounted for using
the same method as the previous method.
(3) Matters relating to the Company shares held by the Trust
A. The carrying amount of shares held by the Trust was ¥163 million at
the end of the previous fiscal year and ¥139 million ($1,247thousand) at
the end of the fiscal year.
B. The shares held by the Trust are recorded as treasury stock undershareholders' equity.
C. The number of shares at the end of the year was 65,000 for theprevious fiscal year and 55,800 for the fiscal year, while the average
number of shares during the year was 69,477 for the previous fiscal
year and 59,354 for the fiscal year.
D. For the purposes of calculating per-share data, the number of sharesat the end of the year and the average number of shares for the year
are included in the treasury stock which should be deducted.

Annual Report 201714

Stock-based compensation plan linked to company performance
The company has instituted a stock-based compensation plan linked
to company performance (the “Plan”) for directors (excluding outside
directors and part-time directors) and executive officers (excluding
personnel assigned overseas) ("Directors, etc."). The Plan is closely
linked to company performance, which helps improve the Company’s
performance and enhance the awareness of contributions to increase
corporate value. The Plan adopts a scheme called executive
compensation BIP trust.

Directors, etc. from the Company by the third-party allotment according
to a prescribed rule for granting shares.
According to the rule for granting shares, the Trust delivers theCompany’s shares to Directors, etc. who meet certain requirements forbeneficiaries upon their retirement in the number of shares determinedbased on the performance indicators, etc. for each fiscal year.
Voting rights related to the Company’s shares categorized as trust
assets of the Trust shall not be exercised during the period of trust.

(1) Overview of transactions
At the Board of Directors meeting held on May 28, 2014, the launch of
the Plan was resolved for Directors, etc. and proposition for the Plan
was approved at the 64th Ordinary General Meeting of Shareholders
held on June 24, 2014. The Company’s shares that the Trust acquires
will be delivered to Directors, etc., in a quantity corresponding to thenumber of points awarded to them based on performance indicators andtitles under the Plan.

(2) Matters relating to the Company shares held by the Trust
A. The carrying amount of shares held by the Trust was ¥109 million at
the end of the previous fiscal year and ¥178 million ($1,592 thousand)at the end of the fiscal year.
B. The shares held by the Trust are recorded as treasury stock undershareholders' equity.
C. The number of shares at the end of the year was 39,226 for theprevious fiscal year and 69,081 for the fiscal year, while the average
number of shares during the year was 39,345 for the previous fiscal
year and 57,025 for the fiscal year.
D. For the purposes of calculating per-share data, the number of sharesat the end of the year and the average number of shares for the year
are included in the treasury stock which should be deducted.

The Trust is established by the company in which Directors, etc. whomeet certain requirements are the beneficiaries and the Company
contributes the amount required to purchase its own shares to the Trust.
The Master Trust Bank of Japan, Ltd. (executive compensation BIP trust
account) purchases the number of shares expected to be delivered to

15 Annual Report 2017

2. Inventories
Inventories as of March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

FY2015
Finished goods
Work-in process
Raw materials
Supplies

13,109
6,049
7,445
3,675
30,279\\U.S. dollars(thousands)

FY2016FY2016

13,840
5,330
7,968
3,647
30,787$ 123,369
47,51571,031
32,510$ 274,426\\

The ending inventory balance presented above is the net of write-downs of inventories when their carrying amounts become unrecoverable.
The amount recognized in cost of sales were a gain on reversal of write-downs of ¥355 million and a loss on write-down of ¥39 million ($348
thousand) as of March 31, 2016 and 2017, respectively.

3. Securities
Available-for-sale securities with carrying amounts (fair values) exceeding acquisition costs as of March 31, 2016 and 2017 were as follows:
Japanese yen (millions)

March 31, 2016

Acquisition cost Carrying amount

Equity securities
Bonds
Others

\

\

716
－
－
716

\

\

2,059
－
－
2,059

Difference
\

\

1,343
－
－
1,343

Japanese yen (millions)

March 31, 2017

Acquisition cost Carrying amount

Equity securities
Bonds
Others

\

\

566
－
－
566

\

\

2,040
－
－
2,040

U.S. dollars (thousands)
Difference

\

\

1,474
－
－
1,474

Acquisition cost Carrying amount
$

$

5,048
－
－
5,048

$

$

18,191－－
18,191

Difference$$

13,143－－
13,143Available-for-sale securities with carrying amounts (fair values) not exceeding acquisition costs as of March 31, 2016 and 2017 were as follows:
Japanese yen (millions)

March 31, 2016

Acquisition cost Carrying amount

Equity securities
Bonds
Others

\

\

63
－
－
63

\

\

40
－
－
40

Difference
\

\

(23)
－
－
(23)

Japanese yen (millions)

March 31, 2017

Acquisition cost Carrying amount

Equity securities
Bonds
Others

\

\

380
－
－
380

\

\

287
－
－
287

U.S. dollars (thousands)
Difference

\

\

(93)
－
－
(93)

Acquisition cost Carrying amount
$

$

3,392
－
－
3,392

$

$

2,563
－
－
2,563

Difference
$

$

(829)
－
－
(829)

Annual Report 201716

The carrying amount of securities with no available fair values as of March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

FY2016FY2015
Available-for-sale securities with no available fair values
Non-listed equity securities\

U.S. dollars(thousands)

50

40

\

FY2016$356

Available-for-sale securities sold during FY2015 and FY2016 were as follows:
Japanese yen (millions)

March 31, 2016
Equity securities
Bonds
OthersAmounts sold
\

\

558
－
－
558

Gains on salesof available-forsale securities\\

Loss on salesof available-forsale securities

375
－
－
375

－
－
－
－

Japanese yen (millions)

March 31, 2017
Equity securities
Bonds
OthersAmounts sold

\

\

249
－
－
249

U.S. dollars (thousands)

Gains on sales of Loss on sales ofavailable-for-sale available-for-salesecurities
securities

\

\

78
－
－
78

－
－
－
－

Amounts sold

Gains on sales of Loss on sales ofavailable-for-sale available-for-salesecurities
securities

2,225
$
$
		
－
－
$
2,225
$

697
－
－
697

－
－
－
－

4. Investments in non-consolidated subsidiaries and affiliates
Investments in non-consolidated subsidiaries and affiliates that were included in "Investments in securities" as of March 31, 2016 and 2017 were as
follows:
Japanese yen(millions)

FY2016FY2015Investment securities

17 Annual Report 2017\   1,142

U.S. dollars(thousands)

\

1,406

FY2016$

12,536

5. Accumulated depreciation
Accumulated depreciation as of March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

Accumulated depreciation

U.S. dollars(thousands)

FY2015FY2016FY2016\  196,244\ 205,947$ 1,835,707

6. Assets Pledged as Collateral
The following assets were pledged as collateral for \192 million and \185 million ($1,652 thousand) of secured loans as of March 31, 2016 and2017, respectively:
U.S. dollars(thousands)

Japanese yen(millions)

FY2016FY2015
Accounts receivable and inventories\

Property, plant and equipment

1,081

\

2,281

$

1,111

1,200
\

1,140

FY2016\

2,251

10,162
9,905$

20,067

Secured debt as of March 31, 2016 and 2017 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)

FY2016FY2015
Short-term borrowings

FY2016

\

192

\

185

$

1,652

\

192

\

185

$

1,652

Annual Report 201718

7. Bonds Payable, Short-term Borrowings and Long-term Debt
Bonds Payable, Short-term borrowings and long-term debt as of March 31, 2016 and 2017 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)

FY2016FY2015FY2016Weighted
averageinterest rates

Years due

28,572

2.6 %

		
－

0.5

8,404

74,912

3.9

44

29

266

－

Bonds payable－

10,00089,1340.4

2026

Long-term debt

21,62925,326

225,743

1.8

2018-2023
2018-2021

Short-term borrowings

\

5,423

\

3,205

Current portion of bond payable

7,000

－

Current portion of long-term debt

4,327

Current portion of lease obligation$

Lease obligations

44

34

303

－

Other interest bearing debt

301

353

3,150

0.5

\ 38,771\ 47,353$ 422,083

Average interest rates for lease obligations are omitted because lease obligations include assumed interest amounts.
Annual maturities of bonds payable, long-term debt and lease obligations as of March 31, 2017 were as follows:

Long-term Debt

Years ending March 31

Japanese yen(millions)

2019

\

U.S. dollars(thousands)

3,420

$

30,492

2020

2,216

19,752

2021

3,264

29,0942022

10,02089,312

6,404

57,090\ 25,326$ 225,743

Lease Obligations

Years ending March 31

Japanese yen(millions)

U.S. dollars(thousands)

2019

\

2023 and thereafter

$

26

237

2020

5

44

2021

1

10

2022

1

10

2023 and thereafter

－

		
－

34

$

\

303

8. Leases(a) Finance leases    (1) Contents of leased assets for finance lease transactions  without ownership-transfer     Mainly, vehicles (Machinery and vehicles) and office equipment (Tools and furniture)    (2) Depreciation of leased assets for finance lease transactions     Described in note1.(i) Leases(b) Operating leases
The scheduled maturities of future lease payments under non-cancelable operating leases as of  March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

FY2016FY2015
Due within one year

\		 3

Due over one year

		 3\

19 Annual Report 2017

6

U.S. dollars(thousands)\

1

FY2016
$

4
\

6

17
38

$

56

9. Income Taxes
Significant components of the Company and consolidated subsidiaries' deferred tax assets and liabilities as of March 31, 2016 and 2017 were as follows:
U.S. dollars(thousands)

Japanese yen(millions)

FY2016FY2015FY2016

Deferred Tax Assets:
Liability for retirement benefits

\

1,584

\

1,711

$

15,256

1,449

880

7,851

Accrued bonuses to employees

826

846

7,546

Losses on write-down of inventories

643

641

5,716

Unrealized gains or losses (inventories)

736

757

6,751

Net operating losses carried forward

6

27

246

Unrealized gains or losses (fixed assets)

390

338

3,019

Provision for product warranties

487

927

8,263

Retirement benefits for directors and corporate auditors  

69

29

264

Impairment losses on property, plant and equipment

Accrued enterprise tax
Depreciation
Remeasurements of defined benefit plans
Other
Subtotal Deferred Tax Assets

123

134

1,199

1,133

972

8,666

79

(22)

(204)

1,812

2,329

20,762

9,345

9,574

85,342

Valuation allowance

(397)

(991)

(8,835)

Total Deferred Tax Assets

8,948

8,583

76,506

Property, plant and equipment(3,635)(2,835)(25,277)

Asset for retirement benefits

(312)

(300)

(2,678)(2,194)(2,195)(19,571)

Reserve for advanced depreciation

(265)

(262)

(2,337)Net unrealized gains on available-for-sale securities

(400)

(513)

(4,579)

Other

(154)

(299)

(2,665)(6,961)(6,407)(57,110)Deferred Tax Liabilities:

Retained earnings of overseas subsidiaries

Total Deferred Tax Liabilities
Net Deferred Tax Assets

\

1,987

\

2,176

$

19,396(Note) Net deferred tax asset for the prior and current fiscal year is included in the following line items of consolidated balance sheet:
U.S. dollars(thousands)

Japanese yen(millions)

Current Assets - Deferred tax assets
Current Liabilities - Other current liabilities
Fixed Assets - Deferred tax assets
Fixed Liabilities - Deferred tax liabilities

FY2015FY2016FY2016

3,873

4,290

38,240

27

35

319

544

722

6,438

2,403

2,800

24,963

Annual Report 201720

The Company and its consolidated subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate a statutory tax
rate in Japan of approximately  33.1% and 30.9% for the years ended March 31, 2016 and 2017.
The following table summarizes the significant differences between the statutory tax rate and the Company's effective tax rate for financial statement
purposes for the years ended March 31, 2016 and 2017:

FY2015FY201633.1 %

30.9%

Different tax rates applied to overseas subsidiaries

(3.6)

(3.6)

Tax credit for research and development expenses

(4.1)

(3.1)

Per capital inhabitants tax

0.1

0.2

Non-deductible expenses

0.3

0.7

Foreign withholding tax

0.5

0.6

Increase (decrease) of retained earnings of overseas subsidiaries

0.1

0.1

Increase (decrease) in valuation allowance

2.5

1.1

Tax-rate change

0.9

－ 		

0.8

0.8

Statutory Tax Rate
Adjustments for:

Net operating losses carried forward of subsidiary		Other
Effective Tax Rate

21 Annual Report 2017

(1.7)

0.3

28.9%

28.0%

10. Employees' Severance and Retirement Benefits
The Company and its domestic consolidated subsidiaries have adopted defined benefit retirement plans such as cash balance plans and lump-sum
payment plans, as well as defined contribution pension plans. Some domestic consolidated subsidiaries use the simplified method for the calculationof projected benefit obligation.
Certain consolidated subsidiary transferred part of its defined benefit retirement plan to a defined contribution pension plan as of April 1, 2015.
The following tables provide information on defined benefit plans for the years ended March 31, 2016 and 2017.
Japanese yen(millions)Defined benefit plans

Beginning balance of retirement benefit obligations\

Service costs
Actuarial loss (gain)
Benefits paid
Effect of transfer to defined contribution pension plan\\

Expected return on plan assets
Actuarial gain (loss)
Benefits paid
Effect of transfer to defined contribution pension plan
Ending balance of plan assets

\

\

7,189

FY2016$64,082
2,317

260

43

18

169

373

(62)

(555)

(379)

(369)

(3,291)(1,321)

－

7,189

\

4,726

7,036

－
$

FY2016FY2015(2) Rollforward of plan assets
Beginning balance of plan assets

8,233
240

		Interest costs

Ending balance of retirement benefit obligations

FY2016FY2015(1) Rollforward of retirement benefit obligations, except plans applying simplified method

U.S. dollars(thousands)

\

3,246

62,723

FY2016$28,936

70

64

578

(115)

(28)

(252)

(233)

(205)

(1,832)(1,202)

－

－

3,246

\

3,077

$

27,430		
Beginning balance of liability for retirement benefits

FY2016FY2015(3) Rollforward of liability for retirement benefits related to plans applying simplified method
\

176

\

185

FY2016$

1,654

Retirement benefit costs

18

17

152

Benefits paid

(9)

(9)

(80)

		OtherEnding balance of liability for retirement benefits\

Plan assets
		
Unfunded retirement benefit obligations
Net liability (asset) for retirement benefits

\

\

2,180

171

$

FY2016FY2015(4) Reconciliation of retirement benefit obligations and plan assets and liability (asset) for retirement benefits
Funded retirement benefit obligations

185

(201)

(23)

－
\

\

2,012

1,525

FY2016$

17,940(3,246)(3,077)(27,430)(1,066)(1,064)(9,490)

5,194

5,195

4,128

\

4,130

46,308$36,817		Liability for retirement benefits

5,178

5,195

46,308Asset for retirement benefits(1,049)(1,064)(9,490)Net liability (asset) for retirement benefits

\

4,128

\

4,130

$

36,817(Note) Include plans applying simplified method		Service costs

FY2016FY2015(5) Retirement benefit costs
\

240

\

260

FY2016$2,317Interest costs

43

18

169

Expected return on plan assets

(70)

(64)

(578)

Net actuarial loss amortization

220

280

2,501

Retirement benefit costs by simplified method

152

17

18

Total retirement benefit costs

\

452

\

511

$

4,562

Gain (loss) on transfer to defined contribution pension plan

\

105

\

－

$

－

Annual Report 201722

Japanese yen(millions)(6) Remeasurements of defined benefit plans, before tax effect
Recognized actuarial loss (gain)\

FY2016

(268)

314

(268)

314

\

\

(249)

FY2016
2,804
$

65
65

\

2,804

FY2016FY2016(249)

Unrecognized actuarial loss (gain)
Total accumulated adjustments for retirement benefit

FY2015FY2015(7) Accumulated remesurements of defined benefit plans, before tax effect

U.S. dollars(thousands)

580
$

580

		
(8) Plan assets① Plan assets comprise		Bonds
Equity securities

FY2015FY2016

72%

75%

25%

22%

		Other3%3%

		Total

100%

100%

		
② Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining
the long-term expected rate of return.
		

FY2015FY2016

0.2 ～ 0.4%

0.2 ～ 0.5%

2.0%

2.0%

(9) Actuarial assumptions
The principal actuarial assumptions (expressed as weighed averages) were as follows:
Discount rateLong-term expected rate of return

Japanese yen(millions)\23 Annual Report 2017

FY2016FY2015(10) Payment for defined contribution plan

549

U.S. dollars(thousands)\

569

FY2016$5,075

11. Research and Development Expenses
Research and development expenses are charged to income as incurred. Research and development expenses for the years ended March 31,
2016 and 2017 were as follows:
Japanese yen(millions)

FY2016FY2015
Research and development expenses

5,374

\

U.S. dollars(thousands)\

FY2016

5,763$

51,374

12. Derivatives
The following table provides information on derivative instruments as of March 31, 2016 and 2017.
Japanese yen (millions)

March 31, 2016

Contract
amount

Fair
value

Gain
(Loss)

Forward exchange contracts:
To sell U.S. dollars\

To sell Euro

151

\

256

2

\

105

2

\

(1)
1

\

(1)
1

\

Japanese yen (millions)

March 31, 2017

Contract
amountFair
value

U.S. dollars (thousands)

Gain(Loss)

Contract
amount13$ 8,104

Fair
value

Gain
(Loss)

Forward exchange contracts:
To buy U.S. dollars

\

909

\

13

\

$

118

$

118

To sell U.S. dollars

29

1

1

264

15

15

To sell Euro

91

1

1

817

16

16

1,090

96

96

9,722

859

859

Currency swap transactions:
Receipts: U.S. dollars Payments: Mexican pesos
Receipts: U.S. dollars Payments:Indonesian rupiahs

867\ 2,988

19
\

133

\

19

7,730

177

177

133

$ 26,638$ 1,187$ 1,187

Annual Report 201724

13. Segment Information(a) General information about reporting segments

The Company and its consolidated subsidiaries are mainly engaged in the manufacture and sale of automotive parts.
Based on function, technological specification and productive structure, the product lines of the Company are classified into two groups, "Manual
Transmission Parts" and "Automatic Transmission Parts". The Company, in cooperation with its consolidated subsidiaries, designs strategies andconducts business for these two product lines in Japan and overseas. For each of these product lines, separate financial information is available
among the constituent units of the Company and is regularly reviewed by the company's Board of Directors in determining how to allocate resources
and in performance evaluation. Accordingly, the reporting segments of the Company consist of "MT (Manual automotive drivetrain related business)"which manufactures and sells manual transmission parts and "AT (Automatic automotive drivetrain related business)" which manufactures and sells
automatic transmission parts.'(b) Basis of measurement for reporting segment profit or loss, segment assets, segment liabilities and other material items
The accounting policies of the reporting segments are mainly consistent with what is described in Note 1 "Summary of Significant Accounting andReporting Policies". The segment profit (loss) is based on operating income before amortization of goodwill. The prices of the goods traded ortransferred among the segments are mainly determined by considering market prices of the goods.
(c) Information about reporting segment profit or loss, segment assets, segment liabilities and other material items
Reporting segment information for the years ended 31, 2016 and 2017 were as follows:
Japanese yen(millions)

Sales:		Manual automotive drivetrain operations        Eliminations (inter-segment net sales)        Net sales to external customers
Automatic automotive drivetrain operations        Eliminations (inter-segment net sales)        Net sales to external customers
Reporting segments total
Other operations        Eliminations (inter-segment net sales)        Net sales to external customers
Operating Income:Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations
Assets:Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations
Depreciation and Amortization:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations
Investment in associates accounted for under the equity method:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations

FY2015FY2016FY2016\ 71,776(109)
71,667
167,826(1,432)
166,393
238,061
37,183(6,492)
30,690\ 268,752\ 68,393(128)
68,264
170,335(2,031)
168,303
236,568
35,964(6,410)29,553\ 266,121$ 609,618(1,148)608,469
1,518,276(18,108)1,500,168
2,108,638
320,565(57,139)
263,425$ 2,372,063\ 10,891
9,430
20,321
1,395
21,717(411)\ 21,305\ 10,502
11,336
21,838716
22,555(471)\ 22,083$\ 67,381
143,797
211,178
29,265
240,444
18,829\ 259,273\ 68,350
157,685
226,036
27,219253,255
26,816\ 280,072$ 609,240
1,405,524
2,014,764
242,617
2,257,382
239,027$ 2,496,409

3,470
11,60815,078
2,033
17,112(186)\ 16,925

3,389
11,676
15,066
1,980
17,047(152)\ 16,894

$

312
597
910
496
1,406
－
1,406

$

\

\

\

25 Annual Report 2017

U.S. dollars(thousands)

305
434
740
401
1,142
－
1,142

\

\

\

93,612
101,044
194,656
6,388
201,045(4,201)$ 196,843

30,214
104,078
134,293
17,657
151,950(1,362)$ 150,588

2,788
5,323
8,112
4,424
12,536
		－$
12,536

Japanese yen(millions)

FY2016FY2015
Capital Expenditures:
Manual automotive drivetrain operations
Automatic automotive drivetrain operations
Reporting segment total
Other operations
Sub Total
Corporate and eliminations

3,179
21,38924,5691,530
26,100(136)\ 25,964\

U.S. dollars(thousands)

4,068
24,83428,903908
29,812(196)\ 29,615\

FY2016$36,265
221,361
257,6278,100
265,727(1,755)$ 263,972

Note : 1. "Other operations" includes businesses which are not part of any of the two reporting segments and contains industrial machine drivetrain operation, clutches
for motorcycle operation, and transport operation, etc.
2. The details of adjustments are as follows:(a) "Corporate and eliminations" of Operating Income \(471) million ($(4,201) thousand) consists of "Elimination of intersegment transactions" \1,487 million      ($13,260 thousand), "Amortization of goodwill" \(119) million ($(1,064) thousand), "Corporate expense" which is not allocated to reporting segments \(1,727)     million ($(15,397) thousand) and "other adjustments" \(112) million ($(999) thousand). "Corporate expense" mainly consists of general and administrative
expenses and expense for new-product development not attributable to any reporting segments.
(b) "Corporate and eliminations" of Assets \26,816 million ($239,027 thousand) consists of "Corporate assets" which is not allocated to reporting segments\28,171 million ($251,103 thousand), "Elimination of intersegment transaction" \(1,354) million ($(12,076) thousand) and "Corporate assets" mainly
consists of the cash and deposits and securities that are not attributable to any reporting segments.
(c) "Corporate and eliminations" of Depreciation and Amortization \(152) million($(1,362) thousand) consists of "Adjustment of unrealized gain on intersegment
transaction of fixed assets" \(152) million($(1,362) thousand).
(d) "Corporate and eliminations" of Capital Expenditures \(196) million($(1,755) thousand) consists of "Adjustment of unrealized gain on intersegment      transaction of fixed assets" \(196) million($(1,755) thousand).
3. The segment income is adjusted to conform to operating income of "consolidated statement of income".

(1)  Information about products and services       As the segment of products and services are the same as the reporting segment, description of this item is omitted.
(2) Information about geographic areas for the years ended March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

Sales:
Japan
North, Central America
Asia-Oceania
Other
Property, plant and equipment:
Japan
North, Central America
Asia-Oceania
Other

U.S. dollars(thousands)

FY2015FY2016FY2016\ 106,177
42,11691,392
29,066\ 268,752\ 111,371
36,962
71,63946,148\ 266,121$ 992,708
329,461
638,551
411,343$ 2,372,063\ 53,842
20,437
49,696
3,133\ 127,109\ 62,053
22,90644,8204,079\ 133,860$ 553,107
204,180
399,50936,359$ 1,193,155

The Company's operations are classified into geographical areas as follows: Japan, North, Central America (including USA, Mexico,
Panama), Asia-Oceania (including Thailand, Malaysia, China, Korea, Indonesia, Vietnam, Australia, United Arab Emirates, New Zealandand India) and Other (mainly Europe).  
(3) Information about major customer for the years ended March 31 2016 and 2017 were as follows:
Japanese yen(millions)Company Name

Sales Segment

JATCO Corporation

AT and MT

U.S. dollars(thousands)

FY2015FY2016FY2016\ 20,291\ 19,614$ 174,830

Annual Report 201726

14. Related Party Transactions
A summary of the significant transactions between the Company and its consolidated subsidiaries and such companies for the years ended March
31, 2016 and 2017 were as follows:
March 31, 2016
Not Applicable.

March 31, 2017
Not Applicable.

15. Per Share Data
Per share data for the years ended March 31, 2016 and 2017 were as follows:
Japanese yen

Profit attributable to owners of parent
Profit attributable to owners of parent - diluted
Net assets

FY2015FY2016\ 250.17－
3,366.87\ 288.44－
3,501.19

U.S. dollars

FY2016
$

2.57
－
31.21

Diluted net income per share is not disclosed because potentially dilutive securities have not been issued.
The information on which per share data was calculated for the years ended March 31, 2016 and 2017 was as follows:
Japanese yen(millions)

Net income per share of common stock
Profit (loss) attributable to owners of parent
Amounts not attributable to common stockholders
Net income attributable to common stockholders of parent  
The weighted average number of common stock (thousands)

27 Annual Report 2017

U.S. dollars(thousands)

FY2015FY2016FY2016\ 12,013－\ 12,013\ 13,855－\ 13,855$ 123,496－$ 123,496

48,02048,034

16. Changes in Net Assets(a) Shares issued / Treasury stock

Number of shares
as of April 1, 2015

March 31, 2016
Shares issued:
Common stock (thousands)

Number of shares
as of March 31, 2016

Increase

Decrease

48,593
48,593－－－－

48,593
48,593

583
583

0
0

14
14

568
568

Treasury stock:
Common stock (thousands)

The decrease in the number of treasury stock-common stock of 14 thousand shares is due to shares delivered from The Master Trust Bank ofJapan, Ltd. (ESOP Trust Account) to employees who become beneficiaries of the ESOP based on the Company’s rules for granting shares. (13thousand shares) and due to shares delivered from The Master Trust Bank of Japan, Ltd. (BIP Trust Account) to directors and officers who become
beneficiaries of the BIP based on the Company’s rules for granting shares (0 thousand shares).
The number of treasury stock as of March 31, 2016 includes the Company’s stock amounted to 65 thousand shares held by The Master Trust Bankof Japan ,Ltd. (ESOP Trust Account) and 39 thousand shares held by The Master Trust Bank of Japan, Ltd. (BIP Trust Account)
The increase in the number of treasury stock-common stock of 0 thousand shares is due to purchase of fractional shares of the stock.
Number of shares
as of April 1, 2016

March 31, 2017
Shares issued:
Common stock (thousands)

Number of shares
as of March 31, 2017

Increase

Decrease

48,593
48,593－－－－

48,593
48,593

568
568

0
0

15
15

553
553

Treasury stock:
Common stock (thousands)

The decrease in the number of treasury stock-common stock of 15 thousand shares is due to shares delivered from The Master Trust Bank ofJapan, Ltd. (ESOP Trust Account) to employees who become beneficiaries of the ESOP based on the Company’s rules for granting shares(9 thousand shares) and due to shares delivered from The Master Trust Bank of Japan, Ltd. (BIP Trust Account) to directors and officers
who become beneficiaries of the BIP based on the Company’s rules for granting shares (6 thousand shares).
The number of treasury stock as of March 31, 2017 includes the Company’s stock amounted to 55 thousand shares held by The Master Trust Bankof Japan ,Ltd. (ESOP Trust Account) and 69 thousand shares held by The Master Trust Bank of Japan, Ltd. (BIP Trust Account)
The increase in the number of treasury stock-common stock of 0 thousand shares is due to purchase of fractional shares of the stock.
(b) Dividends(1) Dividends
March 31, 2016
Cash dividends paid

Dividends per share

Common stock\ 1,684

Common stock\ 1,684

Resolution

Type of shares

Ordinary general
meeting of theshareholders on
June 26, 2015
Board of Directors'
meeting on
October 27, 2015

Japanese yen (millions)Cut-off date

Effective date

\ 35.0March 31, 2015

June 29, 2015

\ 35.0  

September 30, 2015

November 24, 2015

(Japanese yen)

Annual Report 201728

March 31, 2017
Cash dividends paid

Dividends per share

Common stock\ 1,684$ 15,014

Common stock\ 1,685$ 15,026

Resolution

Type of shares

Ordinary general
meeting of theshareholders on
June 28, 2016
Board of Directors'
meeting on
October 28, 2016

Japanese yen (millions)
U.S. dollars (thousands)

Cut-off date

Effective date

\ 35.0$ 0.31March 31, 2016

June 29, 2016

\ 35.0$ 0.31

September 30, 2016

November 21, 2016

(Japanese yen)
(U.S. dollars)(2) Dividends, of which cut-off date was in the year ended March 31, 2017, and effective date of which will be in the year ending March 31, 2018

Resolution

Type of shares

Ordinary general
meeting of theshareholders on
June 27, 2017

Common stock

29 Annual Report 2017

Cash dividends paid

Source ofdividends

Dividends per share\ 2,167$ 19,319

Retainedearnings\ 45.0$ 0.40Japanese yen (millions)
U.S. dollars (thousands)(Japanese yen)
(U.S. dollars)

Cut-off date

Effective date

March 31, 2017

June 28, 201717. Financial Instruments
The Company and its consolidated subsidiaries manage funds only in short-term deposits, raise funds by bonds or loans and engage in derivativetransactions for the purpose of avoiding the risk of foreign exchange rate fluctuation and ensuring steady cash flow, and not for trading or speculative
purposes. Hedging accounting of derivative transactions was not applied as the necessary conditions were not met.
Notes and accounts receivable and other receivables have exposure to the credit risk of customers. The Company and its consolidated subsidiaries
manage such risk by controlling the due date and balance of receivables from customers and monitoring their credit risk conditions in accordance with theGroup credit regulations. Furthermore, to avoid the risk of foreign exchange rate fluctuation and to ensure steady cash flows from accounts receivable, theCompany and its consolidated subsidiaries engage in derivative transactions (forward currency exchange contracts).
Equity securities have exposure to the risk of market price fluctuations. The Company and its consolidated subsidiaries hold such securities for the purposeof maintaining relationships with customers or suppliers and not for trading purposes. The fair values of the securities are periodically reported to the Boardof Directors at the board meeting of the Company.
Due dates of notes and accounts payable and other payables are mainly within one year.
Short-term borrowings are mainly for the purpose of fluctuations working capital and bonds payable and long-term debt are mainly for the purpose offunding capital investment.
Derivative transactions are entered and controlled by the financial department with approval of the financial manager under the rules of eachcompany, which prescribe details such as the department in charge of transactions and the limits for transaction. To reduce credit risk,
transaction counterparties are limited to major financial institutions.
Notes and accounts payable and borrowings have exposure to liquidity risk. The Company and its consolidated subsidiaries are controlling such risk by
developing monthly cash planning.
The carrying amounts of the financial instruments included in the consolidated balance sheet and their fair values at March 31, 2016 and 2017 were as
follows.
Japanese yen (millions)

March 31, 2016

Book
value

Fair
value

Cash and deposits\ 31,975\ 31,975

Notes and accounts receivable
Allowance for doubtful accounts

Difference\－

48,530(126)
48,404

48,404－

Investments in securities
Available-for-sale securities

2,100

2,100

－

Notes and accounts payable(19,266)(19,266)－

Short-term borrowings(5,423)(5,423)－

Accrued expenses(8,801)(8,801)－

Accrued income taxes(1,839)(1,839)－Bonds payable(7,000)(7,000)－Long-term debt

(25,957)(26,112)

(155)

1

1

－

Derivative transactions

Japanese yen (millions)

March 31, 2017

Book
value

Fair
value

Cash and deposits\ 45,523\ 45,523

Notes and accounts receivable
Allowance for doubtful accounts

U.S. dollars (thousands)

Difference
\

－

Book
value

Fair
value

$ 405,773$ 405,773

Difference$－

438,498

49,195(132)(1,185)49,06249,062－437,312437,312

－

2,328

2,328

－

20,75420,754－

Notes and accounts payable(19,892)(19,892)－(177,312)(177,312)－

Short-term borrowings(3,205)(3,205)－(28,572)(28,572)－

Accrued expenses(9,838)(9,838)－(87,697)(87,697)－

Accrued income taxes(3,506)(3,506)－(31,258)(31,258)－

Bonds payable(10,000)(10,000)－(89,134)(89,134)－

Long-term debt

(33,730)(33,736)(6)(300,655)(300,704)

(49)

(133)

(133)

－

(1,187)(1,187)－

Investments in securities
Available-for-sale securities

Derivative transactions

Annual Report 201730

1. The methods used to determine the fair value of financial instruments and derivative transactions are as follows:As cash and deposits, notes and accounts receivable, notes and accounts payable, short-term borrowings, accrued expenses and accrued
income taxes are settled in the short term, the carrying amounts are considered to approximate fair values. Therefore, they are stated at carrying
amounts.
Investments in securities (Available-for-sale securities) are stated at fair value. The fair values of equity securities are their market prices.
Information regarding investments in securities classified by the purposes for which they are held is discussed in the relevant section of thisreport.
Bonds payable are stated at fair value based on the method in which total amount of principal and interest is discounted at the interest that would
be applied if the company issued the same, but new, principal amount.
Long-term debt is stated at fair value based on the method in which total amount of principal and interest is discounted at the interest rate thatwould be applied if each company borrowed the same, but new, principal amount.
Derivative information is reported in the relevant section of this report.
2. Financial instruments for which the fair values are considered difficult to determine
Non-listed equity securities (book value \1,446 million ($12,893 thousand)) have no market price available, also the future cash flows cannot be
estimated reliably, and are considered to be financial instruments for which the fair values are difficult to determine. Therefore, these instruments are
not included in "Investment in securities (Available-for-sale securities)" in the table above.
3. Receipt schedule for receivables after the consolidated balance sheet dateJapanese yen (millions)

Cash and time deposits
Notes and accounts receivable

FY2017FY2018 ～FY2021\ 45,523\

49,195\ 94,718－

FY2022 ～FY2026\－FY2027 andthereafter

FY2017FY2018 ～FY2021

FY2022 ～FY2026FY2027 andthereafter\－$ 405,773

$

$

$

－

438,498－$ 844,272

－

－
\

－

U.S. dollars (thousands)

\

－

\

－
－

$

－
－

$

－

－
－

$

－

－

4. Payment schedule for long-term debt after the consolidated balance sheet dateJapanese yen (millions)
FY2017
Bonds Payable
Long-term debt\－

U.S. dollars (thousands)

FY2018 ～FY2021

FY2022 ～FY2026FY2027 andthereafter\\ 10,000

\

－

8,404

18,921

6,404\ 8,404\ 18,921\ 16,404\

FY2017$－－FY2018 ～FY2021

FY2022 ～FY2026FY2027 andthereafter$$ 89,134$－－

74,912

168,652

57,090－$ 74,912$ 168,652$ 146,224

－
－

$

－

18. Contingent Liabilities
Contingent liabilities as of March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

FY2016FY2015Trade notes receivable discounted
Trade notes receivable endorsed

31 Annual Report 2017

\

669
34

U.S. dollars(thousands)

\

596
－

FY2016$5,319－

19. Comprehensive Income
Amounts reclassified to net income (loss) in the current period that were recognized in other comprehensive income in the current or previous periods
and tax effects for each component of other comprehensive income were as follows:
Japanese yen(millions)

U.S. dollars(thousands)

FY2016FY2015FY2016

Valuation difference on available-for-sale securities
Increase (decrease) during the year
Reclassification adjustments

\

(643)

436

\

(78)

(378)

$

3,888
(697)

(1,022)

358

3,191

Tax (expense) or benefit

354

(113)

(1,012)Sub-total, net of tax

(667)

244

2,178

(4,956)(5,005)(44,615)

Sub-total, before tax

Foreign currency translation adjustment
Increase (decrease) during the year
Remeasurements of defined benefit plans
Increase (decrease) during the year

(488)

33

302

Reclassification adjustments

220

280

2,501

Sub-total, before tax

(268)

314

2,804

82

(96)

(862)

(185)

217

1,942

Increase (decrease) during the year

(4)

(5)

(50)

Total other comprehensive income(5,814)(4,548)(40,546)

Tax (expense) or benefit
Sub-total, net of tax
Share of other comprehensive income of associates accounted for using the equity method

20. Cash and Cash Equivalents
Cash and Cash Equivalents as of March 31, 2016 and 2017 were as follows:
Japanese yen(millions)

Cash and deposits
Time deposits with maturities of more than three months
Cash and cash equivalents

U.S. dollars(thousands)

FY2015FY2016FY2016\ 31,975\ 45,523$ 405,773

(414)

(789)

(7,033)31,56044,734

398,740

Annual Report 201732

Independent Auditors' Report
EXEDY CORPORATION AND CONSOLIDATED SUBSIDIARIES

33 Annual Report 2017