Annual Report 2015
Year ended March 31, 2015

Celebrating Our 140th Anniversary

In August 2015, the Furukawa Company Group will celebrate 140 years since its foundation.
We trace our history back to the development of the Ashio Copper Mine by founder Ichibee
Furukawa. At the time, the Company introduced world-leading mine development technologies that have become the foundation for its technological expertise today. Since then, we
have developed and advanced our technologies—amassed through mine development—
according to the needs of the times.
Today, the Machinery business and the Materials business, which are our core business domains, continue toprovide products that the world needs. Going forward,
we will work to expand our presence in fast-growing
businesses with strategic priority on our two fundamental policies, which are to “strengthen the technical capabilities of the Machinery business and promote further
overseas development” and “promote development
activities aimed at new product commercialization.”

Ichibee Furukawa

Ashio Copper Mine

Furukawa’s Technological Genealogy

Mining technologies
Exploitation technologies

Drilling
technologies

Hydrauliccontrol
technologies

ROCK DRILLS MACHINERY

Hydraulic breakers,
hydraulic crushers,
hydraulic crawler drills,
tunnel drill jumbos

Transport / Mineral processing
technologies

Slurrytransportation
technologies

UNIC MACHINERYUNIC cranes,
mini crawler cranes,
UNIC carriers,
UNICPAL

Machinery Business

Smelting technologies

Flash smelting
technologies

Sulfuric acidproduction
technologies

Electric
technologies

INDUSTRIAL MACHINERYMETALSCHEMICALSELECTRONIC
MATERIALS

Pumps,
environmental machinery,crushers,
bridge structures,
castings

Electrolytic copper,
gold,
silver,sulfuric acid

Cuprous oxide,
sulfuric acid,aluminum sulfate,titanium oxide,
ferric polysulfate
solution,
cupric oxide

High-purity metallic
arsenic,
gallium phosphide
polycrystals,
scintillator crystals,
aluminum nitride,coils, lenses

Grinding
technologies

Exhaust gas
treatment
technologies

Materials BusinessProfile

Financial Highlights For the years ended March 31
Millions of yen

2015/3

2014/3

2013/3

2012/3

2011/3For the year:¥ 172,544¥ 163,026¥ 165,540¥ 157,566¥ 165,638

Operating income
Income (loss) before income taxes andminority interests
Net income (loss)

8,925

6,886

3,363

2,155

2,821

6,160
9,793

7,092
3,976

5,433
2,976

(2,663)(1,659)447
563

Capital expenditures

2,557

11,430

2,926

3,588

2,112

Depreciation and amortization

3,223

2,828

3,015

3,329

3,290

Research and development expenses

2,227

2,539

2,559

2,622

2,225

Total assets¥ 207,317¥ 199,408¥ 186,076¥ 193,971¥ 196,234

Net assets

70,581

56,31351,50747,66847,622

Net sales

At year-end:

Per share amounts:

Yen¥

Net income (loss)
Cash dividends
Net assets

24.23

¥

9.84

¥

(4.11) ¥

1.39

5.00

3.00

2.00

7.37

¥

0.00

0.00

170.22135.34123.99113.88113.45Return on equity (ROE) (%)

15.9

7.6

6.2

(3.6)

1.2

Equity ratio (%)

33.2

27.4

26.9

23.7

23.4

Priority Fields in Machinery BusinessHydraulic crawler drills:

Hydraulic breakers:

Crushers:

domestic market sharedomestic market share%domestic market share

65%

CONCRETE

15

40%

Material for concrete andthe like

Crushes and cuts bedrock
into small pieces

TUNNELPROJECTSCIVIL
ENGINEERINGANDCONSTRUCTION
WORKSITES

Tunnel drill jumbos:

80%
domestic market share

Shield pumps

Mini crawler cranes:

30%
domestic market share

Hydraulic crushers:

UNIC cranes:

domestic market share%domestic market share

10%

50

FURUKAWA CO., LTD. Annual Report 2015 1

To Our Stakeholders

Business Conditions and Performance
In fiscal 2015, ended March 31, 2015, the Japanese economy
continued recovering moderately on the back of improved corporate earnings, despite signs of weakness in personal consumption.
However, instability among overseas economies led to the risk of
downward pressure on the domestic economy—a situation that
required ongoing caution.
Under these circumstances, the Furukawa Company Group actively advanced its operations by accurately grasping market needs
and stepping up its overseas business expansion.
As a result, consolidated net sales amounted to ¥172,544 million, up 5.8% from the previous year. This was driven mainly byincreased revenue in the Rock Drills Machinery, UNIC Machinery,
Metals, and Real Estate segments. Operating income rose 29.6%,
to ¥8,925 million, owing mainly to higher earnings in the Rock
Drills Machinery, UNIC Machinery, and Real Estate segments.
Among other income, we received ¥819 million in compensation
income for damages resulting from the Fukushima nuclear power
plant accident, ¥645 million in gain on business withdrawal fromoperations at Port Kembla Copper Pty. Ltd., a consolidated subsidiary in Australia, and ¥530 million in gain on transfer of businessassociated with the after-sales service business for multilevel parking systems. Among other expenses, there was a ¥2,409 million
provision for deposition field restoration (cost of earthquake-proofing our deposition field, which is the final disposal facility for residue and the like from our mine). Moreover, the withdrawal fromthe Port Kembla Copper Pty. Ltd. business led to the forfeitureof receivables in Port Kembla Copper Pty. Ltd. held by Furukawa
President and Representative Director

Naohisa Miyakawa

Company and its consolidated subsidiaries, resulting in deferredincome taxes of ¥5,018 million. As a result, net income for the year
jumped 146.3%, to ¥9,793 million.
Future Initiatives
Going forward, the Furukawa Company Group will continue working to improve earnings and increase corporate value according
to its two fundamental policies, which are to “strengthen thetechnical capabilities of the Machinery business and promote further overseas development” and “promote development activities
aimed at new product commercialization.”In the Machinery business, we will reinforce our revenue founda-

2 FURUKAWA CO., LTD. Annual Report 2015

To Our Stakeholders

tion by addressing areas where domestic demand is firm, such as

Net Salesdisaster recovery projects, new Shinkansen lines, the Linear Chuo
Shinkansen Line, the Building National Resilience Plan, and the2020 Summer Olympics and Paralympics in Tokyo. At the same

(Billions of yen)
165.6 157.6 165.5 163.0 172.5

time, we will build a foundation for the future in large overseas
markets, centering on resources development and infrastructuredevelopment. In this context, we will further strengthen the global
sales and services systems of the Rock Drills Machinery and UNIC
Machinery segments, so we can supply products that satisfy customers in terms of price, quality, and delivery times, and thus ex-'11/3 '12/3 '13/3 '14/3 '15/3
Machinery Business

Materials Business

Others Businesspand market share. At the Tsukuba Development Center, openedin 2014, we will increase the speed and efficiency of product development based on flexible concepts that transcend machines andmaterials, with the aim of stimulating new product development
matched to the needs of the times.

Operating Income

Dividend Policy(Billions of yen)

Furukawa places great importance on improving returns of profits
8.9

to all shareholders while retaining earnings required to finance6.9

capital expenditures and research and development expenses necessary to bolster earnings. Our basic policy is to appropriate profits
after comprehensive consideration of future business development
and various other factors.
In fiscal 2015, the Company declared a year-end cash dividend

2.8

2.2

3.4

'11/3 '12/3 '13/3 '14/3 '15/3

of ¥5.00 per share, up ¥2.00 from the previous year. In fiscal 2016,
we plan to pay a year-end dividend of ¥5.00 per share, with nointerim dividend scheduled.
We look forward to the understanding and support of all stakeholders as we tackle the challenges of the future.
Net Assets(Billions of yen)August 2015

70.6
47.6 47.7

51.5

56.3

Naohisa Miyakawa
President and Representative Director'11/3 '12/3 '13/3 '14/3 '15/3

FURUKAWA CO., LTD. Annual Report 2015 3

Interview with
President Miyakawa

Please describe your business plans for the
Furukawa Company Group.

Question 1
Answer 1
About two years have passed since I became president, and duringthat time our business environment has changed dramatically. Domestic demand is now stronger than ever, driven by full-fledged
disaster recovery projects, infrastructure development projects associated with the Building National Resilience Plan, the Linear Chuo
Shinkansen Line and other transportation infrastructure projects,
and civil engineering and construction projects for the 2020 Summer
Olympics and Paralympics in Tokyo. Such a phenomenon happens
only once every several decades. Our aim is to properly embrace thisColumn 1

strong domestic demand and build up a steady track record by focusing our managerial resources on the Machinery business, one of
the two pillars of the Group’s operations.
Meanwhile, 2015 marks the 140th anniversary of our company,
and I am once again reminded how effectively we are applying ourmine development technologies, amassed over many years, to meetdemand for the abovementioned domestic infrastructure projects.
Our broad-ranging machinery-related technologies are being used
in a large-scale project for relocating people to higher ground in Rikuzentakata City, Iwate Prefecture, and we continue to identify new
potential for our offerings in infrastructure projects, such as using
our belt conveyors to transport sand and gravel.
In consideration of these trends, we have positioned three priority
fields in which we have particular expertise in the context of infrastructure demand, and will address such demand accordingly. Thesepriority fields are tunnel projects, concrete, and civil engineering andconstruction worksites (Column 1).
Meanwhile, resource development markets overseas are currently
languishing. Nevertheless, we will continue addressing firm domestic
demand and use our track record and expertise to solidify our positions in overseas resource development and infrastructure projects.
The Materials business, our other operational pillar, provides astable source of income despite lack of major foreseeable growth in
the immediate future. Going forward, we will work to secure stable
income by cutting costs and enhancing efficiency while developing
new products for the future.

Business environment and priority fields

In the infrastructure development market, we have identified threepriority fields: tunnel projects, concrete, and civil engineeringand construction worksites. Domestic demand for infrastructuredevelopment is expected to continue increasing in the future.
A number of transportation projects are in progress or in planning,
including disaster recovery roads, new Shinkansen lines, and the Linear
Chuo Shinkansen Line. Other major construction projects include
the Building National Resilience Plan and facilities for the 2020
Summer Olympics and Paralympics in Tokyo. In the aforementioned
three strategic fields, we will steadily address flourishing demand formachinery products in order to strengthen our income foundation.
4 FURUKAWA CO., LTD. Annual Report 2015

Priority Fields

Main Sites

Relevant Products

Tunnelprojects

Reconstruction roads and service roads Tunnel drill jumbos
New Shinkansen lines
Shield pumps
Linear Chuo Shinkansen Line
Belt conveyors

Concrete

Quarries
Quarrying plants

Hydraulic crawler drills
Hydraulic breakers
Crushers
Screens

Civil engineering andconstruction
worksites

Civil project worksites
Building construction sites
Building demolition sites

UNIC cranes
Mini crawler cranes
Hydraulic breakers

Please describe initiatives in businesses andfields of particular focus going forward.

Question 2

Column 2

Answer 2
Tunnel excavation projects for the Linear Chuo ShinkansenLine are attracting attention as a major source of domestic
infrastructure-related demand. Tunnels in mountainous areas,such as Japan’s Southern Alps, account for more than half of alltunnel extension projects planned in the nation. These include
many long-distance tunnels with high levels of difficulty in locations with complex geological faults and earth coverings. Here,
we anticipate solid demand for our tunnel drill jumbos, which
occupy a market share of around 80%. Rather than rest on ourlaurels, however, we will unveil new models fitted with high-performance navigation and other functions and strengthen relationships with general contractors in the Tohoku District, where projects are flourishing. In these ways, we will attract steady orders
for our tunnel drill jumbos to be used in Linear Chuo ShinkansenLine projects (Column 2).

Development of tunnel drill jumbo for Linear Chuo Shinkansen Line

Scheduled to open in 2027, the Linear Chuo Shinkansen Line willconsist mostly of tunnels. Mountain tunnels in Japan’s Southern Alpsand locations in geological fault zones with complex strata will requireparticularly difficult excavation methods. In response, the Furukawa
Company Group developed and launched the JTH3200R-IIIPLUS,
a new type of tunnel drill jumbo for Linear Chuo Shinkansen Line
excavation projects. In addition to improved striking power of thehydraulic drifter, the core of the machine, we have added our newly
developed “Drill Navi” function to enhance navigation of the drilling
position, allowing fast, reliable, safe, and accurate drilling work.
Information-oriented operation is also possible thanks to a system thatrecords all drilling data. In these tunneling projects, which require highspeed work, the new machine allows more efficient work processes inshorter time periods. In December 2014, we held information meetingsand demonstrations for each of Japan’s major general contractors tohighlight the high-performance capabilities of the new tunnel drill
jumbo.

New type of tunnel drill jumbo
expected to be used in Linear Chuo
Shinkansen Line

Demonstration

High-performance navigation
function

FURUKAWA CO., LTD. Annual Report 2015 5

Answer 2
Meanwhile, we look forward to healthy demand for shield
pumps—another Furukawa strength—in underground tunnel
projects in urban areas, where the shield method is mostly employed. We have built a track record and experience in urban tunnel projects, such as the Tokyo Bay Aqua Line, Tsukuba Express,
and Bosporus Strait. We will deploy these strengths to develop
new technologies for Linear Chuo Shinkansen Line projects,
which involve deep tunnels and will require larger and higherperformance pumps than those currently available.
Our involvement in tunnel projects for the Linear Chuo Shinkansen Line alone will help expedite our own technological innovation and spur the development of new technologies andproducts—creating a beneficial cycle for the Group. In addition
to selling products, there is a growing need for support in suchareas as design, execution, installation, and operational management, where we can use our knowledge as a manufacturer tooffer problem-solving proposals. With respect to earth-crushingand transportation equipment for the Rikuzentakata City project(large-scale crushing system, long-distance belt conveyor system,
suspension bridge), for example, we handled everything from design to operational management—and this track record is already

Column 3

uncovering new demand in the earth-crushing and transportation
field.
While infrastructure-related demand is flourishing in Japan, we
will solidify our positions in overseas markets to prepare for expected growth in demand in the future. Here, our Rock Drills Machinery and UNIC Machinery segments will be particularly usefulas we address diversifying needs in industrialized nations, emerging nations, and resource development nations. The key point will
be to deploy our technical development capabilities, amassed in
the domestic infrastructure sector, to offer products that matchthe attributes of each region.
In the UNIC Machinery segment, which has potential for market expansion, we are enjoying sales growth for our mini crawler
cranes in Europe. Similarly, we will seek to tap new applications
as we endeavor to address market needs. This will include monitoring customer demand while closely watching the market forused trucks mounted with UNIC cranes. Meanwhile, we haveincreased the production capacity of our factory in Thailand tomeet expected growth in demand, and will make that plant our
production base for globally strategic products (Column 3).

Thailand to become our production
base for globally strategic products

In the UNIC Machinery segment, we have three production
bases, in Japan (Sakura City, Chiba Prefecture), China (Taian
City, Shandong Province), and Thailand. At present, we place
top priority on expanding worldwide sales of our UNIC cranes
and mini crawler cranes. To this end, we have improved ourthree-pronged production system and extended and reinforced
facilities with the aim of making Thailand our production
base for globally strategic products. Going forward, we will
progressively relocate production of export machinery from the
Sakura Plant to our facility in Thailand, with the Sakura Plant
assuming an important role as the “mother factory” making
products for the domestic market.

Thai Plant

Truck-mounted UNIC craneMini crawler craneAlso in overseas markets, we need to build a business model
covering everything from stand-alone product sales to after-sales
services, including maintenance and supply of parts. Going forward, we will further raise the quality and functionality of our
products and strengthen our after-sales services, which is a priority, to build a business model that generates high profits for the
future.

6 FURUKAWA CO., LTD. Annual Report 2015

What are your thoughts with respect tothe road the Furukawa Company Groupshould take and the image
it should target?

Question 3

Answer 3
As I mentioned earlier, in 2015 we will celebrate 140 years of history. Technologies introduced by our founder, Ichibee Furukawa,
were state-of-the-art technologies at that time. Our subsequentaccumulation of such technologies has become the foundation
for the Furukawa Company of today. I expect that the ways of
the world will change, from supply of stand-alone products toprovision of network-capable equipment connected to sensors,
control equipment, and other devices. To address this trend, weestablished the Control System Development Group within our
Tsukuba Development Center, a brand-new R&D facility completed in 2014. We are now able to respond swiftly when developing
technologies, including control and communications technologies

Column 4

for machine-related products (Column 4). We will continue compiling existing technologies and innovating new ones to meet theneeds of the times, including for man–machine control systems
and support systems. In these ways, we will strive to “remain
a company that is always needed by society.” This is road weshould take, I believe.
In the current year, we will also formulate a corporate governance code. What do we need in order to steadily increase corporate value? I want to address this question while communicating
more closely with stakeholders, especially shareholders and otherinvestors, in order to deepen our mutual understanding.

Innovating our R&D system

In the year under review, the Group renewed its R&D system with the
opening of the new Tsukuba Development Center. This represented
a shift from our previous system, where the Materials and Machinery
R&D domains were separated, to a new framework enabling us
to focus more closely on core businesses and deliver outcomes thatreflect our vision. The result will be faster and more efficient productdevelopment. Within the Center, we established the Control System
Development Group, which deploys the latest technologies in such areas
as sensor-driven data collection and processing, as well as control andcommunications, to pursue development of proprietary intelligencedriven technologies. Development of such systems will facilitate
automation, energy savings, and optimized operation of our machinebased products, and data thus collected can be used to enhance ourafter-sales services.

Research and Development Division

Development Division

R&D Planning Department

R&D Planning Department

Techno-Research Laboratory

Tsukuba Development Center

Materials Research Laboratory
Intellectual Property Department
Semiconductor Growth
System Department
Nitride Semiconductors Department
Control Department

1. Control System Development Group2. Materials Development Group
3. Advanced Devices Development Group
4. Technology Research GroupIntellectual Property Department
Nitride Semiconductors Department
Control Department

FormerNew

FURUKAWA CO., LTD. Annual Report 2015 7

Review of Operations
Industrial Machinery% of Net Sales

44.0%

MachineryIn fiscal 2015, the Industrial Machinery segment posted a yearon-year increase in revenue, benefiting from a large-scale
bridge project for the public sector with a two-year construction
period. We also enjoyed higher sales of pumps, plants, and environmental recycling equipment, as well as crushers and othergeneral industrial machinery, mainly for the construction sector.
In addition, we booked healthy sales of equipment to facilitate
relocation to higher ground in earthquake-affected areas. As aresult, the segment posted sales of ¥16,713 million, down 9.8%
from the previous fiscal year. Operating income declined 7.6%,
to ¥1,711 million.
Going forward, we will work to expand sales of crushingequipment for the gravel and cement sectors, which provide
raw materials for concrete, where demand is expected to continue amid full-scale restoration projects and increasing public
works business. With respect to infrastructure development, we
will target bridge projects while addressing new demand forlong-distance belt conveyors, used to transport earth and gravel, which have become popular in high-ground relocation projects. In addition, we will strive to stabilize income by tapping
new markets for slurry pumps and deeply penetrate existing
markets. We will also focus on swiftly establishing new productsthat will support our business into the future.

Sludge pump

Crusher

Belt conveyor

BridgeNet Sales

Operating Income (Loss)(Billions of yen)
18.5

10.7

(Billions of yen)

1.9
16.7

12.9 12.9

0.7

1.7

0.8

(0.0)

8 FURUKAWA CO., LTD. Annual Report 2015'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3

Machinery/Review

Rock Drills MachineryofOperations

UNIC Machinery

In the Rock Drills Machinery segment, we reported domestic
In fiscal 2015, domestic truck registrations grew 9.6% year on
growth in sales of hydraulic breakers and hydraulic crushers
year on the back of solid public-sector spending and disasterdue to increased public works projects, as well as demolition
recovery demand. This enabled us to increase shipments ofwork in the Tokyo Metropolitan Area. Shipments of hydraulic
UNIC cranes and report healthy shipments of vehicle carriers
crawler drills were also healthy thanks to increased production(UNIC carriers). Overseas, we generated higher revenue relatedof gravel and limestone for restoration projects in the Tohoku
to infrastructure projects in Southeast Asia, in addition to North
District, infrastructure projects in the Tokyo Metropolitan Area,
America and Europe as we have in the past. As a result, sales inand disaster-prevention projects. Taking advantage of a vibrant
the UNIC Machinery segment climbed 10.2% year on year, tomarket for civil engineering tunnel projects, we also increased¥28,367 million, and operating income rose 15.1%, to ¥3,615
shipments of tunnel drill jumbos. Overseas, we reported healthy
million.
shipments of a new series of hydraulic breakers to the Middle
Going forward, we expect domestic sales of trucks to deEast, as well as increased shipments of hydraulic crawler drills to
crease slightly, but we will work to increase the percentage
North America and Africa. As a result, the Rock Drills Machineryof truck-mounted cranes (UNIC cranes) while targeting higher
segment posted a 15.2% increase in sales, to ¥30,911 million,
sales of mini crawler cranes, which are independent of truckand a 259.2% jump in operating income, to ¥1,225 million.
related demand, as well as shipbuilding cranes and forestry
In Japan and abroad, we will work to expand sales of
cranes. Overseas, we will strengthen alliances with agencies in
new-model hydraulic breakers. Overseas, we will seek to boost
Southeast Asia, as well as North America and Europe, while culsales of hydraulic crawler drills by stepping up sales and service
tivating new markets. With respect to our three-pronged global
support for agencies that have become more user-oriented. In
production
system, with operations in Japan, China, and ThaiGlobal
MarketJapan, where infrastructure and civil engineering projects conland, we will
pursue a policy of making high-quality products at
Sharetinue to flourish, we will roll out products that match customer Japaneseappropriate cost to meet demand in various regions throughout
30％
needs and strengthen our after-sales services. We will focus Market
the world.
Our
plant in Thailand, with upgraded production
Shareparticular attention on attracting orders for tunnel drill jumbos
facilities, will serve as our production base for globally strategic
トラック搭載型クレーン 65％
キャリア
to be used in tunnel projects for new Shinkansen
lines and the
products.
（ユニッククレーン）（ユニックキャリア）
Linear Chuo Shinkansen Line.
GlobalMarketShare

30％

Japanese
MarketShare

JapaneseJapanese
MarketMarket
Share
Share

65％

Japanese
MarketJapanese Share
Market
Share
％

40％

65

JapaneseJapanese
MarketMarket
Share
Share

50
％％
40

50
％％
80

GlobalMarketShare

Truck-mounted UNIC crane

トラック搭載型クレーン（ユニッククレーン）

30％JapaneseMarketShare

80％

Hydraulic crawler drill

Japanese
MarketShare

Hydraulic breaker

40％

JapaneseJapanese
MarketMarket
Share Share

50％

Japanese
MarketShare

Japanese
MarketShare

キャリア（ユニックキャリア）

50％30％

80％

UNIC carrier

Mini crawler craneTunnel drill jumbo

Net Sales

23.9 24.1 23.3

26.8

Net Sales

Operating Income (Loss)(Billions of yen)

1.2

30.9

Operating Income (Loss)(Billions of yen)(Billions of yen)

25.7

(Billions of yen)

28.4

3.1
2.2

20.7
0.3

0.3

12.5

3.6

16.1

0.9
(0.2)

(0.1)
(0.4)
'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3

FURUKAWA CO., LTD. Annual Report 2015 9

Metals% of Net Sales

54.1%

Materials● Copper Prices and Foreign Exchange Rates

After starting the year at US$6,632.00/ton in April 2014, theprice of electrolytic copper moved to around US$7,000 amid
economic recovery in the United States and expectations about
economic stimulus measures taken in China. Moving into September, however, the price was weakened by the U.S. dollar’sappreciation. It subsequently plummeted, due to falling crude
prices after the close of calendar 2014, as well as a strong U.S.
dollar and fears of a debt crisis in Europe. The price reached its
lowest point of US$5,390.50 at the end of January and finished
the year at US$6,050.50/ton on March 31, 2015. During theyear, we enjoyed firm demand for copper among automakers
and semiconductor device makers. Demand for electric cable also
remained solid, bolstered by redevelopment projects in the Tokyo
Metropolitan Area, as well as restoration projects and construction of mega-solar facilities.
In fiscal 2015, the Company’s sales of electrolytic copper involume terms increased 1,708 tons, to 96,675 tons. Despite pricedeclines in overseas markets, sales of electrolytic copper increased
year on year, thanks to higher sales volume and the weak yen.
Overall sales in the Metals segment rose 3.6%, to ¥81,514 million, and operating income decreased 3.5%, to ¥1,450 million.
The business environment of the Metals segment improved
thanks to highly favorable purchasing conditions of raw materials, coupled with the weak yen. However, there are also someconcerns, such as increasing costs of environmental measures,
as well as rising electricity prices. We must also closely monitor
nationalistic tendencies with respect to procuring raw materials.
Revenue from overseas mines in which the Company has mining rights (reported under other income) has weakened due todepressed metal prices, so we will work hard to cut costs.
2011/3

2012/3

2013/3

2014/3

2015/3

LME copper price (average; US$/ton)

8,139

8,485

7,855

7,104

6,554

JPY rate per US$ (average for fiscal year)¥85.71¥79.07¥83.10¥100.24¥109.93

2011/3

2012/3

2013/3

2014/3

2015/3Copper production volume (tons)

89,52376,896

90,38787,76790,447

Copper sales volume (tons)

89,17682,597

96,78994,966

96,675● Copper Production and Sales Volume** Furukawa Metals & Resources Co., Ltd.

Net Sales

Operating Income(Billions of yen)
Electrolytic copper(Billions of yen)

Hibi Kyodo Smelting Co., Ltd.

80.0

68.1

77.9

78.7 81.5

1.5

1.5
0.3
Gibraltar Copper Mine in Canada

Onahama Smelting and Refining Co., Ltd.

'11/3 '12/3 '13/3 '14/3 '15/3

10 FURUKAWA CO., LTD. Annual Report 2015

1.5

0.3

'11/3 '12/3 '13/3 '14/3 '15/3

Materials/Review

Electronic Materials

Japanese
MarketShare

70％

In fiscal 2015, we reported a year-on-year increase in sales,
including of ferric polysulfate solution, an inorganic chemical
used to purify water at sewage plants. However, shipments oftitanium dioxide were weak. As a result, the Chemicals segment posted a 1.4% decrease in sales, to ¥6,014 million, and a
15.2% decline in operating income, to ¥268 million.
Looking ahead, we will improve the quality of our sulfuric
acid products by modernizing our manufacturing facilities whileclosely monitoring the supply–demand balance in the market.
We will also work to expand market share for existing products
through active, effective sales activities based on a unified manufacturing sales approach. We will also develop a new earnings
foundation by upgrading our lineup of copper-related products.

GlobalMarketShare

Japanese(Production)
Market Share

50％

45％

Cuprous oxide is a red powdery
substance used to prevent corrosion
on the underside of marine vessels.

High-purity metallic arsenic—high-purity gallium arsenide
semiconductor materials used in mobile phones and otherelectronic devices, red laser diodes, and LEDs

Core coils used in automobile electronic
control devices

Owing to its excellent thermal conductivity, thermal radiation, and electricalinsulation properties, aluminum nitride
is a basic material used in semiconductor device fabrication components andsubstrates.

Net Sales

Operating Income (Loss)

Cupric oxide used for copper plating

Net Sales

1.3
4.6

5.0

5.4

5.7

Sulfuric acid tank: Sulfuric acid is an
essential basic element for manyindustries, including chemicals andelectronic materials, iron and steel
processing, and food processing.

Operating Income(Billions of yen)(Billions of yen)

7.1

Operations

Chemicals

In the year under review, sales of high-purity metallic arsenic, amainstay product in this segment, continued to struggle due toharmful rumors stemming from the Fukushima nuclear power
plant accident. However, we enjoyed increased sales of coils,
buoyed by firm sales to automakers. As a result, the Electronic
Materials segment posted a 6.7% increase in sales, to ¥5,743
million, and operating income of ¥53 million, compared with anoperating loss of ¥124 million in the previous year.
Going forward, our aim is to expand sales of coils, aluminum
nitride, and optical components while maintaining solid profits
from our mainstay high-purity metallic arsenic and scintillator
crystal businesses despite their ongoing challenges. In particular, we plan to grow our coil products business into a major
pillar supporting the Electronic Materials segment. To this end,
we will focus on all aspects of that business, including productdevelopment, production facilities, and product inspections andquality assurance.

(Billions of yen)

of

5.1

5.2

5.1

6.1

(Billions of yen)

6.0

0.1

0.3

0.3

0.3

0.3

0.3

(0.2) (0.3) (0.1)'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3
FURUKAWA CO., LTD. Annual Report 2015 11

R e a l E st a t eandOthers/Review

ofOperations

Real Estate and Others% of Net Sales

1.9%

Real Estate andOthersIn the Real Estate segment, revenue from the Muromachi Furukawa Mitsui Building (commercial name: COREDO Muromachi
2), completed in February 2014, helped boost sales, which
surged 150.3% year on year, to ¥2,536 million. Operating
income was ¥776 million, compared with an operating loss of¥43 million in the previous year.
Total sales in the Real Estate and Others segment, which
also includes the transport business, jumped 87.5%, to ¥3,283
million. The segment posted operating income of ¥646 million,
compared with an operating loss of ¥103 million in the previous
fiscal year.

Net Sales

Real Estate
Construction / sales, mediation / brokerage,
other related services for office buildings

OthersOperating Income (Loss)(Billions of yen)(Billions of yen)

3.3
2.4

0.6

0.5
2.0

1.8

0.3

1.8

Transportation services, etc.

0.2
(0.1)

'11/3 '12/3 '13/3 '14/3 '15/3'11/3 '12/3 '13/3 '14/3 '15/3

TOPICS
Miyako Office opened as sales and service base for tunnel drill jumbos
A multitude of tunnel projects are under way
in Japan’s
Tohoku District related to reconstruction roads and service roads. Seeking toReal
Estatestrengthen sales and services for tunnel drill jumbos and other tunnel equipment, we opened a representative office in Miyako City, Iwate
Construction / sales, mediation / brokerage,
Prefecture, in June 2014.

other related services for office buildings

Sales of B-Pro (operational monitoring and recording device for hydraulic breakers) launched
In September 2014, we commenced sales of B-Pro, which monitors and records the operational status of hydraulic breakers that are
attached to hydraulic shovels. The use of light and sound enables operators to navigate effectively and also record the machine’s
operational status.

R&D organization modernized with opening of Tsukuba Development Center
In December 2014, the Furukawa Company Group modernized its R&D organization with the opening of the Tsukuba Development Center,
which integrates a technology research operation, a comprehensive materials research operation, and a semiconductor device businessoffice. Our aim is to accelerate and enhance the efficiency of product development by working more closely with core business companies
and adopting a flexible approach that transcends machinery and materials.

UNIC cranes: Thailand to become production base for globally strategic products
Furukawa UNIC (Thailand) Co., Ltd. is a production and sales subsidiary in Thailand for UNIC cranes
and mini crawler cranes. In fiscal 2015, that company built a new facility within its factory site andupgraded related production equipment, with the aim of becoming the Furukawa Company Group’s
production base for globally strategic products.

Launch of Breast-Use PET PEMGRAPH for the effective early detection of breast cancer
In April 2015, Furukawa Scintitech Corporation, a wholly owned subsidiary, launched Breast-Use PET PEMGRAPH. In
addition to increasing the chance of early cancer detection, the new machine is less burdensome on the patient thanconventional breast cancer examination equipment.

12 FURUKAWA CO., LTD. Annual Report 2015

Corporate Social Responsibility

C o r p o r a t e S o c i a l R e sp o n s i b i l i t yManagement Philosophy
The Furukawa Company Group has a wealth of mine development and other technologies that underpin its social foundation. By
advancing these technologies and always embracing a spirit of challenge, we will remain indispensable to society.

Corporate Conduct CharterTo demonstrate our Management Philosophy, we will practice our Corporate Conduct Charter of Innovation, Creativity, andHarmony. These embody the three key words—Luck, Stolidity, and Perseverance*—that best represent the spirit of our founder.

Innovation:

We will work constantly at self-innovation by embracing a future-oriented mindset.

Creativity:
We will seek to create reliable, appealing products that meet market needs.

Harmony:

We will contribute to the development of a society that is in harmony with the environment.
* This means that while humans may place highest importance on “luck,” getting important things done requires “stolidity” and “perseverance.”

The Furukawa Company Group’s Management Philosophy is embodied in its CSR activities.
Since commencing operations in the copper mining business in
1875, we have sought relentlessly to transform ourselves througheverlasting awareness reforms oriented toward the future. At thesame time, we have earned people’s trust by constantly addressing
the needs of the times and acquiring powerful product manufacturing capabilities. In the process, we have developed multiple businesses and made a significant contribution to Japanese industry.
Through compliance, corporate governance, risk management,
and other activities, we strive to raise operational transparency andfurther strengthen our manufacturing capabilities for the future.
We will also help create a sustainable, environmentally friendly
society while deepening communication with our various stakeholders.
The Furukawa Company Group has formulated Action Guidelines, the Corporate Conduct Charter, and the Directors’ andEmployees’ Code of Behavior*. Every effort is made to ensurethat all members of the Group are fully aware of and practice theprinciples contained in each. We have also formed a CSR Promotion Meeting to powerfully promote CSR initiatives. To clarify the
purpose of our activities, we adopt a proactive CSR approach thatinvolves setting core priorities for initiatives to be undertaken.

■ CSR Overview* Corporate Conduct Charter: Formulated on December 20, 2005, the Corporate Conduct Charter clearly outlines the social responsibilities of the Furukawa
Company Group as a corporate citizen. In addition to respect for humanrights and legal compliance, these responsibilities encompass corporate activities that contribute to society in all fields.
Directors’ and Employees’ Code of Behavior: Formulated on December 20,
2005, the Directors’ and Employees’ Code of Behavior sets out behavioral
standards for Group executives and employees aimed at fulfilling basic policies
outlined in the Management Philosophy, Action Guidelines, and Corporate
Conduct Charter.

Customers

We shall provide customers with high-quality products
and services in order to increase satisfaction levels.

Business
partners

We shall build mutually beneficial relationships conduciveto harmonious coexistence through stable procurement
activities based on the principles of fairness and economic
rationality.

Relationships with Stakeholders

Employees

In the course of strengthening CSR activities and demonstrating
our Management Philosophy, we have identified our stakeholders
as follows: Customers, business partners, shareholders and otherinvestors, employees, local communities, and the global environment. Our quest is to clarify our responsibilities to each stakeholder
group and maintain close communications, in order to build relationships of trust and thus maximize corporate value.

Local
We shall build and maintain favorable relationships ofcommunities trust by pursuing social contribution activities aimed atharmonious coexistence with local communities.

Globalenvironment

Customers

Realizing asustainable
societyComplianceresponsibility
Localcommunities

Economic responsibility
12

Business
partners

3

Shareholders
andother investors

Employees

1. Management Philosophy, Action Guidelines
2. Corporate Conduct Charter
3. Directors’ and Employees’ Code of Behavior■ Responsibility to Shareholders
Stakeholder

Responsibility

Shareholders We shall work to maximize corporate value throughand othercommunications focusing on timely, appropriate informainvestors
tion disclosure and IR activities.
We shall create safe, healthy, motivating workplaces inwhich our diversified human resources can excel while
adopting appropriate evaluation standards and fair
incentives.

GlobalWe shall protect biodiversity by developing environmenenvironment tally friendly technologies and products while minimizing
the environmental impact of our activities through savingsof energy and resources and reduction of waste.
FURUKAWA CO., LTD. Annual Report 2015 13

Environmental Protection and Social Contribution Activities

Environmental Protection and Social Contribution Activities

The protection of the environment is one of the most important management issues at the Furukawa Company Group. Our fundamental policy is that each employee should strive to perform all corporate activities in harmony with the environment, consider the improvement of the environment, and contribute to the development of a sustainable society.
Biodiversity is disappearing at an alarming rate on a global scale due to the destruction of ecosystems and extinction of species stemming from the socioeconomic activities of humans. Aware of the importance of protecting biodiversity, the Group formulated a set of “Biodiversity Action Guidelines.”
We recognize the key role we play in giving back to the community as a good corporate citizen.
■ Environmental Management
Environmental Management System
Important items related to environmental protection are put forward and discussed by the Central Committee for Environmental
Management, in which the senior managing directors and managing directors participate.
Furthermore, the Environment and Safety Promotion Committee
meets every year, bringing together the people who directly guideand manage environmental and safety initiatives in each Group
company. At these meetings, the Committee aims to fulfill four basic purposes; (1) convey and ensure the enforcement of decisions
made by the Environmental Management Committee; (2) help improve the competency of environmental protection supervisors at
each Group company; (3) prevent accidents and disasters throughconcerted efforts to share information and reflect it in its daily business management; and (4) verify revisions to environment-related
regulations.
Environment and Safety Audits
The Furukawa Company Group conducts regular annual “Environment and Safety Audits.” The aim of such audits is to emphasize“preventative measures” rather than “correctional measures.”Fiscal 2015 marked the 12th year of these annual audits. In addition to regular site audits, we sought to increase the safety of dayto-day management by confirming how well our employees understand the targets and objectives of our ongoing environmental andsafety efforts, as well as whether or not they are complying fully
with relevant environment- and safety-related laws when performing their tasks at factories and elsewhere.
In the event of a major disaster or ongoing disasters, we closely
monitor the local situation and provide guidance on safety- andenvironment-related matters. When an accident happens, we undertake proper discussion with the onsite manager to determine
the cause, then formulate measures to prevent a recurrence. In
these and other ways, we work continuously to ensure safety inthe workplace.
Biodiversity Action Guidelines
The Furukawa Company Group places importance on biodiversity
and in September 2012 formulated its Biodiversity Action Guidelines, a set of specific guidelines aimed at contributing to sustainable social development as outlined in its Basic Environmental
Management Principle. At present, we are working to foster an understanding of the importance of biodiversity among all employees
and to grasp how biodiversity is impacted by the Group’s ongoing
business activities.
■ Environmental Protection Activities
The Furukawa Company Group’s energy-saving activities center onachieving medium-term targets for energy and resource consumption set every five years. We are currently pursuing activities based

14 FURUKAWA CO., LTD. Annual Report 2015

on our third medium-term reduction targets (fiscal 2014–2018) asshown below.
Third Medium-Term Reduction Targets (Base year: Fiscal 2013)
Category

Fiscal 2018 (target)

CO2 emissions*

3% reduction of fiscal 2013 consumption

Water

2% reduction of fiscal 2013 consumption

Waste discharge

5% reduction of fiscal 2013 consumption* Forms of electricity used: Gasoline, kerosene, diesel oil, heavy oil, LPG, city gas, and electricity■ Social Contribution Activities
The Furukawa Company Group seeks to live in harmony with local
communities through stewardship and maintenance of forests
owned by Furukawa and involvement in afforestation programs.
We also participate in factory neighborhood cleanup activities andpreservation of Nikko-Suginamiki (“Cedar Avenue of Nikko”), as
well as accept internships and host factory visits. Other initiatives
include fund-raising activities, arranging blood-donor drives, sponsorship of community events, helping preserve biodiversity, holding
original environmental activities, and loaning our land for free tolocal environmental associations.
Sixth Ashio Cherry Tree-Planting Drive
In March 2009, the newly formed Ashio Cherry Blossom Planting
Group got together to begin planting 1,000 cherry blossom seedlings on land owned by Furukawa in Ashio-machi in Tochigi Prefecture. The tree-planting activity has been held annually since then,except in 2011 when the event
was cancelled due to the Great
East Japan Earthquake. In March
2015, many Group employees andtheir families took part in the Sixth
Ashio Cherry Tree-Planting Drive.
Highest-Level Environmental Rating Received from DBJ
The Development Bank of Japan Inc. (DBJ) assigns DBJ Environmental Ratings to companies receiving financing, and on November 28, 2014, the Furukawa Company Group obtained DBJ’s
highest-level environmental rating. DBJ developed a screening(rating) system that evaluates companies on the level of their environmental management and applies financing conditions basedon such evaluations. The bank was the first in the world to incorporate environmental ratings into a financing menu. The Furukawa
Company Group obtained this rating in recognition of its “especiallyadvanced efforts in consideration of the environment.” This represents DBJ’s high assessment of our various businesses to develop andsupply products that help resolve social issues.
In addition, we started quantifying CO2 reduction contribution amounts across all operations
in order to better visualize the environmental
contribution of our products. This initiative wasalso highly acclaimed.

Corporate GovernanceCorporate GovernanceThe basic corporate governance policies of the Furukawa Company Group are to raise management transparency, continue corporate structural innovations to build an efficient operating system, generate stable income to increase corporate value, andcontribute to the interests of shareholders and other stakeholders.
Under these basic policies, each company in the Group will pursue flexible management based on clear asset management
and profit/loss responsibilities while maintaining the Group as a united entity. Our aim is to maximize the corporate value of theentire Group by offering products and services that satisfy customers.
■ System of Corporate GovernanceFurukawa maintains a Board of Directors comprising seven members, one of whom is appointed from outside the Group. The
Board of Directors oversees the execution of the Furukawa Company Group’s operations and in principle meets once every month,with additional meetings held as required.
To clearly separate management oversight functions from executive functions, accelerate decision-making, and clarify responsibilities, Furukawa has adopted an executive officer system. At present,
we have 12 executive officers, five of whom concurrently holdpositions as directors.
The Management Council sets the Furukawa Company Group’s
fundamental management policies and strategies and makes decisions on important matters. There is also a Management Committee, which meets monthly to discuss the operations of Furukawa
and its core companies, and provides direction. Decisions madeby the Management Council that involve the allocation of funds
or other important management issues must be discussed andapproved by a resolution of the Board of Directors. Furthermore,
important matters that have been determined by individual Group
companies are discussed and reviewed by the Board of Directors
and other relevant bodies.
Furukawa uses an auditor system, with an Audit & Supervisory
Board composed of two statutory auditors and three outside auditors. Pursuant to an audit policy formulated by the Audit & Supervisory Board, auditors attend meetings of the Board of Directors,

the Management Council, the Management Committee, and otherimportant management meetings. In addition, they receive business reports from directors, audit business sites and subsidiaries,
and monitor the performance of duties carried out by directors.
The audit function is further reinforced by the Audit Office, theorganization in charge of internal auditing. The Audit Office iscomposed of six members who engage in auditing Group-wide operations management and the execution of business operations. In
order to ensure the efficiency and effectiveness of the audit function, Furukawa continuously works to reinforce cooperation between the Audit Office, auditors, and independent auditors, whotogether devise audit plans, review audit results, and share otheraudit-related information.

■ Compliance and System of Risk Management
The Furukawa Company Group has formulated a Corporate Conduct Charter and the Directors’ and Employees’ Code of Behavior.
Every effort is made to ensure that all members of the Group are
fully aware of and practice the principles contained in each. Recognizing effective risk management as an important aspect of its businessactivities, Furukawa identifies and assesses potential risk and formulates preventive and response measures, as well as remedial initiatives.
We also established the Compliance Committee and the Risk
Management Committee to comprehensively study ways to improve
the Group’s compliance and risk management, including formulation of basic policies and establishment of relevant frameworks.

● Corporate Governance and Internal Control Systems

As of June 26, 2015

Annual General Meeting of Shareholders
Appoints/recalls

Appoints/recalls
Reports

Independent Auditors

Exchanges opinions/information

AuditsBoard of Directors

Reports

7 members(6 internal, 1 outside)

Audit & Supervisory Board
5 members(2 statutory, 3 outside)

Reports

AuditsReports

Reports

Representative Director
Reports

Directs

Reports

Reports

Management
Council

Oversees

Management
Committee

Appoints/recalls

AuditsDirects

Executive Officers(12 members)

AuditsInternal Control Division
Audit Office

AuditsCSR Promotion Meeting

Business execution

Accounting Dept.,
othersAuditsAuditsReports

All Divisions and Group Companies
FURUKAWA CO., LTD. Annual Report 2015 15

Consolidated Six-Year Financial Summary

Six-Year Consolidated Financial Summary

Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31
Millions of yen

2015/3For the year:
Net sales¥ 172,544
Cost of sales
146,657
Gross profit
25,887
Selling, general and administrative expenses
16,962
Operating income
8,925
Income (loss) before income taxes and minority interests
6,160
Net income (loss)
9,793
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Capital expenditures
Depreciation and amortization
Research and development expenses
At year-end:
Total assets
Current assets
Current liabilities
Total equity
Net assets
Interest-bearing liabilities
Per share amounts:
Net income (loss)
Cash dividends
Net assets
Profitability:
Cost of sales margin (%)
Gross margin (%)
SG&A expense margin (%)
Operating margin (%)
Return on sales (%)
Efficiency and soundness:
Return on equity (ROE) (%) (Note 1)
Return on assets (ROA) (%) (Note 2)
Debt-to-equity (D/E) ratio (Times) (Note 3)
Equity ratio (%) (Note 4)
Investment indicators:
Dividend payout ratio (%) (Note 5)
Dividends on equity (DOE) ratio (%) (Note 6)
Price book value ratio (PBR) (Times) (Note 7)
Stock price at fiscal year-end (Yen)

2013/3

2012/3

2011/3

2010/3¥ 163,026 ¥ 165,540 ¥ 157,566 ¥ 165,638 ¥ 142,925
139,777
144,225
138,097
146,364
127,30223,24921,315
19,46919,274
15,623
16,363
17,952
17,314
16,453
14,025
6,886
3,363
2,155
2,821
1,598
7,092
5,433
(2,663)
447
886
3,976
2,976
(1,659)563
585

10,241(10,892)
3,318

1,983
(3,129)(4,562)5,491(2,253)252

4,978(3,153)(3,782)

3,743(1,644)(5,703)9,083(3,643)(4,769)

2,557
3,223
2,227

11,430
2,828
2,539

2,926
3,015
2,559

3,588
3,329
2,622

2,112
3,290
2,225

2,545
3,244
1,862

¥ 207,317
80,56463,87068,78370,581
82,054¥ 199,408 ¥ 186,076 ¥ 193,971 ¥ 196,234 ¥ 204,774
76,83879,50881,49780,19982,61773,97674,43974,80770,45673,73354,695
50,111
46,02245,84948,88656,31351,50747,66847,62250,85577,22080,63585,79689,26594,714
Yen

¥

24.23
5.00
170.22¥9.84 ¥
7.37 ¥(4.11) ¥1.39 ¥
1.45
3.00
2.00
0.00
0.00
0.00
135.34123.99113.88113.45120.96
%

85.0
15.0
9.8
5.2
5.7

85.7
14.3
10.0
4.2
2.4

87.1
12.9
10.8
2.0
1.8

87.6
12.4
11.0
1.4
(1.1)

88.4
11.6
9.9
1.7
0.3

89.1
10.9
9.8
1.1
0.4

15.9
4.8
1.2
33.2

7.6
2.1
1.4
27.4

6.2
1.6
1.6
26.9

(3.6)
(0.9)
1.9
23.7

1.2
0.3
1.9
23.4

1.3
0.3
1.9
23.9

20.6
3.2
1.2
212

30.5
2.2
1.4
186

27.2
1.6
0.9
109

—
—
0.7
80

—
—
0.8
86

—
—
0.9
114

Notes: 1. Return on equity (ROE) = Net income / Average total equity × 100
2. Return on assets (ROA) = Net income / Average total assets × 100
3.	Debt-to-equity (D/E) ratio = Interest-bearing liabilities (fiscal year-end) /Total equity [Shareholders’ equity] (fiscal year-end)
4.	Equity ratio = Total equity [Shareholders’ equity] (fiscal year-end) /Total assets (fiscal year-end) × 100

16 FURUKAWA CO., LTD. Annual Report 20152014/3

5. Dividend payout ratio = Total cash dividends / Net income × 100
6. Dividends on equity (DOE) ratio = Total cash dividends / Average net assets × 100
7. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share

Financial Review

Revenue and Expenses
In fiscal 2015, ended March 31, 2015, consolidated net sales totaled ¥172,544 million, up 5.8% compared with the previous fiscal year. The Industrial Machinery segment posted a 9.8% decrease in sales, to ¥16,713 million, due to completion oflarge-scale disaster recovery projects. However, the Rock Drills Machinery segment
reported a 15.2% rise in sales, to ¥30,911 million, thanks mainly to robust demand inJapan and a healthy performance overseas, and the UNIC Machinery segment recorded a 10.2% increase in sales, ¥28,367 million, benefiting from steady public
works spending and solid reconstruction demand, as well as a rise in domestic truck
registrations. The Metals segment posted a 3.6% increase in sales, to ¥81,514 million,
thanks mainly to a rise in sales of electrolytic copper in volume terms, as well as foreign exchange factors. Sales in the Real Estate segment surged 150.3%, to ¥2,536
million, owing to an increase in rental revenue from the Muromachi Furukawa Mitsui
Building, which was completed in February 2014.
Cost of sales increased 4.9%, to ¥146,657 million, and the cost of sales margin
edged down 0.7 percentage point, to 85.0%.
Selling, general and administrative (SG&A) expenses rose 3.7%, to ¥16,962 million.
As a result, operating income jumped 29.6% from the previous fiscal year, to¥8,925 million. Main contributors to earnings were the Rock Drills Machinery segment, with a 259.2% jump in operating income, to ¥1,225 million; the UNIC Machinery segment, with operating income rising 15.1%, to ¥3,615 million; and the Real
Estate segment with operating income of ¥776 million, compared with an operating
loss of ¥43 million in the previous year. Accordingly, the operating margin rose 1.0
percentage point, to 5.2%.
Among other income, we received ¥819 million in compensation income for damages resulting from the Fukushima nuclear power plant accident, ¥645 million in gain
on business withdrawal from operations at Port Kembla Copper Pty. Ltd., a consolidated subsidiary in Australia, and a ¥530 million gain on transfer of business associated with the after-sales service business for multilevel parking systems. Among otherexpenses, there was a ¥2,409 million provision for deposition field restoration (cost ofearthquake-proofing our deposition field, which is the final disposal facility for residue
and the like from our mine). Moreover, the withdrawal from the Port Kembla Copper
Pty. Ltd. business led to the forfeiture of receivables in Port Kembla Copper Pty. Ltd.
held by Furukawa Company and its consolidated subsidiaries, resulting in deferredincome taxes of ¥5,018 million.
Total income taxes, therefore, amounted to ¥3,755 million. As a result, net income
for the year jumped 146.3%, to ¥9,793 million.
Return on equity (ROE) improved significantly, up 8.3 percentage points, to 15.9%,
and net income per share grew from ¥9.84 to ¥24.23.
Financial Position
At March 31, 2015, total assets amounted to ¥207,317 million, up 4.0% from a year
earlier. The increase stemmed mainly from a rise in retained earnings and an increase
in investment securities thanks to rising prices of our shareholdings.
Total liabilities declined 4.4%, to ¥136,736 million. This was due mainly to a decrease in deferred income taxes stemming from a decline in the effective income tax
rate. The fiscal year-end balance of interest-bearing liabilities (debt) rose 6.3%, to¥82,054 million.

Financial Review

Net Sales(Billions of yen)
200

165.6

157.6

165.5 163.0

172.5

150

100

50

0

'11/3 '12/3 '13/3 '14/3 '15/3

Operating Income
Operating Margin(Billions of yen)
9

(%)
9

8.9
6.9

6

6

5.2

3

3

2.2

1.7
0

4.2

3.4

2.8

2.0

1.4

'11/3 '12/3 '13/3 '14/3 '15/3

0

Net Income (Loss)
Return on Sales
9.8(Billions of yen)
10

(%)
6

5.7

（％）
5

0

3.0
0.6
0.3

4.0
1.8

3

2.4

0

(1.7) (1.1)-5'11/3 '12/3 '13/3 '14/3 '15/3-3

FURUKAWA CO., LTD. Annual Report 2015 17

Net assets at fiscal year-end stood at ¥70,581 million, up 25.3% from a year earlier.
This was mainly due to an increase in shareholders’ equity boosted by higher retained
earnings. Consequently, total equity amounted to ¥68,783 million, and the equity
ratio rose 5.8 percentage points, to 33.2%. The debt-to-equity (D/E) ratio declined
from 1.4 to 1.2 times.

Net Income (Loss) per Share
(Yen)
30

24.23

15

R&D and Capital Expenditures
The Furukawa Company Group is actively engaged in R&D on new materials and highvalue-added products that meet diversified market needs. In the year under review,
total research and development expenses amounted to ¥2,227 million, down 12.3%
from the previous year. Of this total, ¥100 million was allocated to the Industrial Machinery segment, ¥773 million to the Rock Drills Machinery segment, ¥304 million to
the UNIC Machinery segment, ¥952 million to the Electronic Materials segment, and¥96 million to the Chemicals segment.
Capital expenditures (including purchase of intangible fixed assets) amounted to¥2,557 million. Of this total, ¥597 million was allocated to the Industrial Machinery
segment, ¥270 million to the Rock Drills Machinery segment, ¥802 million to the
UNIC Machinery segment, ¥96 million to the Metals segment, ¥287 million to theElectronic Materials segment, and ¥214 million to the Chemicals segment, aimed
primarily at improvements in production efficiency. In addition, ¥102 million was allocated to the Real Estate segment, mainly for maintenance of buildings, and ¥186
million went to the Others segment, mainly for vehicles to be used in the transportation sector. Funds for these expenditures are sourced from internal funds and borrowings. Depreciation and amortization increased 14.0%, to ¥3,223 million.
The Group’s capital expenditure budget is based on comprehensive considerationof various factors, including demand forecasts, production plans, and investment benefits. In the year ending March 31, 2016, the Group plans to invest a total of ¥2.9
billion, mainly for the purchase of new facilities and repair of existing ones. We expect
to procure these funds via borrowings and/or internal funds.
Cash Flows
In the year under review, net cash provided by operating activities amounted to¥10,241 million, up 416.4% from the previous year. The main factor was income
before income taxes and minority interests.
Net cash used in investing activities totaled ¥10,892 million, up 248.1% from theprevious year. The primary factor was purchases of property, plant and equipment.
Net cash provided by financing activities was ¥3,318 million, compared with net
cash used in financing activities of ¥4,562 million in the previous year. This was mainly due to proceeds from long-term debt.
As a result, cash and cash equivalents at the end of the fiscal year totaled ¥15,716
million, up ¥2,982 million, or 23.4%, from a year earlier.

7.37

9.84

1.39
0

(4.11)-15'11/3 '12/3 '13/3 '14/3 '15/3

Total Assets
Return on Assets (ROA)(Billions of yen)210

196.2 194.0

186.1

199.4

（％）

207.3 6

4.8

140

3

1.6

2.1

70

0

0.3
0

(0.9)

'11/3 '12/3 '13/3 '14/3 '15/3

Net Assets
Return on Equity (ROE)（％）(Billions of yen)
90

20

15.9
70.6
60

47.6

47.7

51.5

56.3

6.2

10

7.6

30

0

1.2

0

18 FURUKAWA CO., LTD. Annual Report 2015

-3

(3.6)

'11/3 '12/3 '13/3 '14/3 '15/3-10

Financial Review

Capital Strategies
Furukawa places great importance on improving returns of profits to all shareholders.
Our basic policy is to appropriate profits after comprehensive consideration of various
factors, including retained earnings required to finance capital expenditures and research and development expenses necessary to bolster earnings, as well as futurebusiness development and other factors. In principle, we appropriate retained
earnings to shareholders twice a year in the form of interim and year-end cash dividends. The decision-making body for the year-end dividend is the Annual General
Meeting of Shareholders, while that for the interim dividend is the Board of Directors’
meeting. The Articles of Incorporation states that “subject to resolution of the Boardof Directors, interim dividends may be paid, with September 30 of each year as thedate of record.”
For fiscal 2015, the Company has declared a year-end dividend of ¥5.00 per share,up ¥2.00 from the previous year. Facing rapidly changing economic conditions in Japan and overseas, we will deploy retained earnings to further enhance our businessperformance and improve our financial position. Specifically, we will make careful andeffective investments aimed at strengthening the technological capabilities of our Machinery business while promoting further business development overseas. In the Metals segment, meanwhile, we will invest in mines and promote development activities
aimed at new product commercialization.
Business Risks(1) Fluctuations in the Foreign Exchange and Nonferrous Metals Markets
The Furukawa Company Group is at risk of foreign exchange fluctuations in connection with its export business, the import of raw materials, primarily copper ore, andsmelting and processing income. In addition, the Furukawa Company Group’s stockof nonferrous metal inventories, an internationally traded commodity, is subject tomarket movements. While the Group utilizes foreign exchange contracts and forward
delivery transactions as a hedge against the aforementioned risks, its operating results
and financial position may be adversely affected by movements in exchange rates andnonferrous metal markets.
(2) Investment Securities and Land
Historically, the Furukawa Company Group has maintained relatively high balances ofmarketable securities and land. As of March 31, 2015, the carrying value of investment securities as stated in the balance sheets was ¥28,376 million, while land stoodat ¥55,300 million. Accordingly, the Group’s operating results and financial position
are at risk of impairment losses, losses from devaluation, and losses on sales due tomovements in stock and land prices.

Equity Ratio
(%)
36

33.2
26.9

24

23.4

27.4

23.7

12

0

'11/3 '12/3 '13/3 '14/3 '15/3

Debt-to-Equity (D/E) Ratio(Times)
3

2

1.9

1.9
1.6

1.4

1

0

'11/3 '12/3 '13/3 '14/3 '15/3

Dividends on Equity (DOE)
Ratio
(%)
4.5

3.2

3.0

(3) Retirement Benefit Obligation
The employees of the Furukawa Company Group are covered by defined benefit corporate pension plans, and non-contributory funded employee pension plans. Liability
for retirement benefits are provided at an amount calculated based on the retirement
benefit obligation and the fair value of pension plan assets at the balance sheet date.
In calculating retirement benefit obligation, the Group adopts assumptions in connection with the discount rate and expected rate of return on plan assets, as well asother assumptions. Accordingly, the Group’s operating results and financial position

1.2

2.2
1.6

1.5

0.0

0.0

0.0

'11/3 '12/3 '13/3 '14/3 '15/3

FURUKAWA CO., LTD. Annual Report 2015 19

Financial Review

are at risk in the event the actual discount rate and expected rate of return on plan
assets differs materially from the assumptions, as well as in the event of a change in
the assumptions on which retirement benefit obligation are made.
(4) Earthquakes and Other Natural Disasters
The Furukawa Company Group’s operating results and financial position are at risk inthe event of a suspension in operations and delays in production and/or shipments
due to damage to manufacturing bases and facilities from earthquakes and othernatural disasters.
(5) Environmental Protection
The Furukawa Company Group places the highest importance on environmental protection, environmental safety, and prevention of pollution at its various business sites,
both in Japan and overseas, respecting all laws and regulations. Furthermore, in Japan
the Group is vigilant in preventing water run-off from idle mines from contaminatingwater supplies and in preventing the buildup of slag or slurry. However, in the eventof changes in legislation and the like, there is a possibility that the Group’s performance results and its financial position could be influenced.

Capital Expenditures
Depreciation andAmortization(Billions of yen)
15

11.4
10

5

0

3.3 3.6 3.3 2.93.0
2.1

2.8 2.63.2'11/3 '12/3 '13/3 '14/3 '15/3

Cash Flows(6) Dilution of Shares Due to Exercise of New Stock Acquisition Rights
The Furukawa Company Group seeks to procure investment capital in a flexible manner to fund overseas investments and other initiatives. To this end, the Board of Directors, at its meeting held on December 20, 2010, passed a resolution to issue newstock acquisition rights in a third-party allotment, with the recipient being Mizuho
Securities Co., Ltd. The new stock acquisition rights were subsequently issued on
January 5, 2011. In the event that said rights are exercised, the per-share value of theCompany’s shares may become diluted.

Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities(Billions of yen)
12

6

10.2

3.7

5.0

0.3

0

(1.6)
-6

5.5

(5.7)

(3.2)
(3.8)

(2.3)

3.3

2.0

(3.1)
(4.6)
(10.9)-12'11/3 '12/3 '13/3 '14/3 '15/3

Cash Dividends per Share
(Yen)
6

5.00
4

3.00
2.00

2

0

20 FURUKAWA CO., LTD. Annual Report 201500

'11/3 '12/3 '13/3 '14/3 '15/3

Fi na ncial S e ction

Consolidated Balance Sheets

22

Consolidated Statements of Operations

24

Consolidated Statements of Comprehensive Income

25

Consolidated Statements of Changes in Net Assets

26

Consolidated Statements of Cash Flows28

Notes to Consolidated Financial Statements

29

Independent Auditor’s Report53

FURUKAWA CO., LTD. Annual Report 2015 21

Consolidated Balance Sheets
Furukawa Co., Ltd. and consolidated subsidiaries
As of March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)

Millions of yen

2015

ASSETS

2015

2014

Current Assets:
Cash and cash equivalents¥

15,716¥

12,734$130,967

Receivables—trade

24,75826,698206,317

Finished products

14,441

12,604

120,342Work in process

8,274

7,220

68,950Raw materials and supplies

11,152

13,244

92,933

Deferred tax assets (Note 14)

1,563

885

13,025

Other current assets

4,868

3,656

40,566

Allowance for doubtful accounts

(208)

(203)

(1,733)80,56476,838671,367

Land and timberlands

57,15557,256476,291

Buildings and structures

52,03351,525433,608

Machinery and equipment

39,48848,407

329,067

Lease assets (Note 10)

1,571

1,671

13,092

		Total current assets

Property, Plant and Equipment, at Cost (Notes 6 and 19):

368

240

3,067

150,615

159,099

1,255,125

Accumulated depreciation(64,438)(71,900)(536,983)

		 Property, plant and equipment, net

86,177

87,199718,142

Construction in progress

Investments and Other Assets:
—

48

—

Investment securities (Notes 5 and 6)

30,72725,092

256,058

Investments in affiliates

4,271

5,034

35,592Long-term loans receivable

3,106

2,328

25,883

Deferred tax assets (Note 14)

1,459

1,857

12,158Other assets

1,728

1,644

14,400Allowance for doubtful accounts

(715)

(632)

(5,958)Goodwill

40,576

		 Total investments and other assets
		Total assets

22 FURUKAWA CO., LTD. Annual Report 2015¥

207,317

338,133

35,371¥

199,408$

1,727,642

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 4)

Millions of yen

LIABILITIES AND NET ASSETS
Current Liabilities:
Short-term debt (Note 6)
Current portion of long-term debt (Note 6)
Lease obligations (Note 6)
Payables—trade
Electronically recorded obligations
Income taxes payable
Deferred tax liabilities (Note 14)
Provision for deposition field restoration
Other current liabilities
		 Total current liabilities

2015

¥

Long-Term Liabilities:
Long-term debt (Note 6)
Lease obligations (Note 6)
Provision for environmental measures
Provision for deposition field restoration
Liability for retirement benefits (Notes 3 and 13)
Deferred tax liabilities (Note 14)
Deferred tax liabilities on surplus on the revaluation of land
(Note 14)
Asset retirement obligations
Other long-term liabilities
		 Total long-term liabilities
Net Assets (Note 7):
Shareholders’ equity:
Common stock without par value:
		Authorized—800,000,000 shares
		Issued—404,455,680 shares
Retained earnings
Treasury stock, at cost:		2015—373,806 shares		2014—329,062 shares
		 Total shareholders’ equity
Accumulated other comprehensive income:Unrealized holding gain (loss) on securities, net of income taxes
Deferred gain (loss) on hedges
Surplus on the revaluation of land, net of income taxes
Translation adjustments
Retirement benefits liability adjustments
		 Total accumulated other comprehensive income
Subscription rights to shares
Minority interests
		 Total net assets
		 Total liabilities and net assets¥

12,65815,751284
12,099
8,483
876
0
876
12,84363,870

2015

2014

¥

12,74817,861
311
21,556—2,422
2—19,076
73,976$

105,483
131,258
2,367
100,825
70,692
7,300
0
7,300
107,025532,250

53,645
478
147
1,532
6,875
5,377

46,611
692
149
—
5,672
8,902

447,042
3,983
1,225
12,76757,29244,808

2,017

2,253

16,808209
2,586
72,866

205
4,635
69,1191,742
21,550607,217

28,20830,25828,20821,917

235,066
252,150(58)—
58,408(48)—
50,077(483)—
486,733

9,427
(235)
3,655
1,263
(3,735)
10,37553
1,745
70,581
207,317

5,882
15
3,504
(953)
(3,831)
4,617
53
1,566
56,313
199,408

78,558(1,958)30,458
10,525(31,125)
86,458442
14,542
588,175
1,727,642¥$

The accompanying notes are an integral part of these statements.

FURUKAWA CO., LTD. Annual Report 2015 23

Consolidated Statements of Operations
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)

Millions of yen

2015

Net Sales¥

Cost of Sales (Note 16)

2015

2014

172,544¥(146,657)

163,026$

1,437,867(1,222,142)(139,777)

		Gross profit

25,887

23,249215,725

Selling, General and Administrative Expenses (Note 9)(16,962)(16,363)(141,350)

8,925

6,886

74,375Interest and dividend income

536

413

4,467

Equity in earnings (losses) of affiliates

(921)

(137)

(7,675)Interest expense(913)(1,078)(7,608)Other income (expenses), net (Note 17)(1,467)1,008(12,226)

		 Income (Loss) before income taxes and minority interests

6,160

7,092

51,333Current(1,263)(3,067)(10,525)

Deferred

5,018

134

41,817

		 Total income taxes

3,755(2,933)31,292

Income (Loss) Before Minority Interests

9,915

4,159

82,625

Minority Interests

(122)

(183)

(1,017)

		Operating income
Other Income (Expenses):

Income Taxes (Note 14):

		 Net income (loss)

¥

9,793

¥

3,976

$

Yen

81,608
U.S. dollars (Note 4)

Net Income (Loss) per Share:
Basic

¥

24.23

¥

9.84

$

0.20

Diluted

23.84

9.59

0.20

Net Assets per Share

170.22135.34

1.42

The accompanying notes are an integral part of these statements.

24 FURUKAWA CO., LTD. Annual Report 2015

Consolidated Statements of Comprehensive Income
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)

Millions of yen

2015

Income (Loss) Before Minority Interests

¥

2015

2014

9,915

¥

4,159

$

82,625

Other Comprehensive Income (Loss):
Unrealized holding gain (loss) on securities, net of income taxes

3,545

3,161

29,542

Deferred gain (loss) on hedges

(251)

407

(2,092)

Surplus on the revaluation of land

206

—

1,717

2,090

1,383

17,41796—

800

Translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income (loss) of associates­accounted for using equity method
		 Total other comprehensive income (Note 8)

178

351

1,483

5,864

5,302

48,867

Comprehensive Income (Loss)

15,7799,461

131,492

15,6069,225

130,050

173

236

1,442

Comprehensive Income (Loss) Attributable to:Shareholders of Furukawa Co., Ltd.
Minority interests
The accompanying notes are an integral part of these statements.

FURUKAWA CO., LTD. Annual Report 2015 25

Consolidated Statements of Changes in Net Assets
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2015 and 2014

For the year ended March 31, 2015

Millions of yen
Number ofshares ofcommonstock(thousands)

Shareholders’ equity
Commonstock

Retainedearnings

Treasury stock,at cost21,917¥

Total
shareholders’equityBalance at beginning of year

404,456

Cumulative effects of changes
in accounting principle (Note 3)

—

—

(296)

—

(296)

Restated balance at beginning of year¥

28,208¥(48)¥

50,077404,456

28,20821,621(48)

49,781

Cash dividends paid——

(1,212)—(1,212)

Net income (loss) for the year

—

—

9,793

—

9,793

Purchase of treasury stock

—

—

—

(10)

(10)

Reversal of surplus on the revaluation of land

—

—

56

—

56

—

Net change during the year
Balance at end of year

404,456¥——

28,20830,258For the year ended March 31, 2015

—
¥

(58)

—
¥

58,408

Minority
interests

Total
net assets

53 ¥ 1,566¥56,313Millions of yen
Accumulated other comprehensive income
Unrealized
holding gain
(loss) on
Deferred gain
securities, net(loss) onof income taxes
hedgesBalance at beginning of year¥

Translation
adjustments

Total
Retirement
accumulated
benefits liability
otherSubscription
adjustments comprehensive
rights to(Note 13)
incomeshares5,882 ¥

15 ¥

3,504 ¥

—

—

—

—

—

—

—

—

(296)

Cumulative effects of changes
in accounting principle (Note 3)
Restated balance at beginning of year

Surplus on therevaluation ofland, net ofincome taxes(953) ¥ (3,831) ¥4,617 ¥

5,882

15

3,504

(953)

(3,831)

4,617

53

1,566

56,017

Cash dividends paid

—

—

—

—

—

—

—

—

(1,212)

Net income (loss) for the year

—

—

—

—

—

—

—

—

9,793

Purchase of treasury stock

—

—

—

—

—

—

—

—

(10)

Reversal of surplus on the revaluation of land

—

—

—

—

—

—

—

—

56

3,545

(250)

151

2,216

96

5,758

—

179

5,937

9,427 ¥

(235) ¥

3,655 ¥

53 ¥ 1,745¥70,581

Net change during the year
Balance at end of year¥

1,263 ¥ (3,735) ¥ 10,375 ¥For the year ended March 31, 2014

Millions of yen
Number ofshares ofcommonstock(thousands)

Shareholders’ equity
Commonstock

Retainedearnings

Treasury stock,at cost18,581¥

Total
shareholders’equityBalance at beginning of year

404,456

Cumulative effects of changes
in accounting principle (Note 3)

—

—

—

—

—

404,456

28,20818,581(47)

46,742

Cash dividends paid

—

—

(808)

—

(808)

Net income (loss) for the year

—

—

3,976

—

3,976

Purchase of treasury stock

—

—

—

(1)

(1)

Reversal of surplus on the revaluation of land

—

—

168

—

168

Restated balance at beginning of year

Net change during the year
Balance at end of year

26 FURUKAWA CO., LTD. Annual Report 2015¥—
404,456¥

28,208¥——28,20821,917

(47)

¥

—
¥

(48)

46,742—¥50,077

C o n s o l i d at e d S tat e m e n t s o f C h a n g e s i n N e t A ss e t s

For the year ended March 31, 2014

Millions of yen
Accumulated other comprehensive income
Unrealized
holding gain
(loss) on
Deferred gain
securities, net(loss) onof income taxes
hedgesBalance at beginning of year¥

Surplus on therevaluation ofland, net ofincome taxes

2,727 ¥(390) ¥

—

—

—

2,727
—

(390)
—

Net income (loss) for the year—

Purchase of treasury stockReversal of surplus on the revaluation of land
Net change during the year
Balance at end of year¥

3,673 ¥ (2,641) ¥Minority
interests

Total
net assets

53 ¥ 1,343¥51,507— ¥3,369 ¥

—

—

—

—

—

—

3,673
—

(2,641)
—

—
—

3,369
—

53
—

1,343
—

51,507
(808)

—

—

—

—

—

—

—

3,976

—

—

—

—

—

—

—

—

(1)

—

—

—

—

—

—

—

—

168

3,155

405

(169)

1,688

(3,831)

1,248

—

223

1,471

5,882 ¥

15 ¥

3,504 ¥

(953) ¥ (3,831) ¥4,617 ¥

53 ¥ 1,566¥56,313

Cumulative effects of changes
in accounting principle (Note 3)
Restated balance at beginning of year
Cash dividends paid

Translation
adjustments

Total
Retirement
accumulated
benefits liability
otherSubscription
adjustments comprehensive
rights to(Note 13)
incomesharesFor the year ended March 31, 2015

Thousands of U.S. dollars (Note 4)
Shareholders’ equity
Commonstock

Retainedearnings

Balance at beginning of year

$ 235,066$ 182,642

Cumulative effects of changes
in accounting principle (Note 3)—

Restated balance at beginning of year

Total
shareholders’equityTreasury stock,at cost$(400)$ 417,308(2,467)—(2,467)

235,066

180,175(400)

414,841

Cash dividends paid—

(10,100)—(10,100)

Net income (loss) for the year—

81,608—81,608Purchase of treasury stock

—

—

(83)

(83)

Reversal of surplus on the revaluation of land

—

467

—

467

—

—

$ 235,066$ 252,150

Net change during the year
Balance at end of year

$

—

—

(483)

$ 486,733

The accompanying notes are an integral part of these statements.

For the year ended March 31, 2015

Thousands of U.S. dollars (Note 4)
Accumulated other comprehensive income
Unrealized
holding gain
(loss) on
Deferred gain
securities, net(loss) onof income taxes
hedgesSurplus on therevaluation ofland, net ofincome taxes

Translation
adjustments

Total
Retirement
accumulated
benefits liability
otherSubscription
adjustments comprehensive
rights to(Note 13)
incomesharesMinority
interests

Total
net assets

Balance at beginning of year

$ 49,017

Cumulative effects of changes
in accounting principle (Note 3)

—

—

—

—

—

—

—

—

(2,467)

Restated balance at beginning of year

$ 125 $ 29,200 $ (7,942) $ (31,925) $ 38,475 $442 $13,050 $469,275

49,017125

29,200(7,942)(31,925)

38,475442

13,050466,808

Cash dividends paid

—

—

—

—

—

—

—

—

(10,100)

Net income (loss) for the year

—

—

—

—

—

—

—

—

81,608Purchase of treasury stock

—

—

—

—

—

—

—

—

(83)

Reversal of surplus on the revaluation of land

—

—

—

—

—

—

—

—

467

29,541(2,083)

1,258

18,467800

47,983—

1,492

49,475

Net change during the year
Balance at end of year

$ 78,558 $ (1,958) $ 30,458 $ 10,525 $ (31,125) $ 86,458 $442 $14,542 $558,175

FURUKAWA CO., LTD. Annual Report 2015 27

Consolidated Statements of Cash Flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 4)

Millions of yen

2015

Operating Activities:
Income (Loss) before income taxes and minority interests
Foreign exchange (gains) losses
Depreciation and amortization
Equity in losses (earnings) of affiliates
Increase (Decrease) in accrued employees’ retirement benefits
Increase (Decrease) in net defined benefit liability
Compensation income
Gain on transfer of business
Increase (Decrease) in provision for deposition field restoration
Interest and dividend income
Interest expense
Changes in operating assets and liabilities:
Receivables—trade
Inventories
Payables—trade
Other		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Compensation received
		 Net cash provided by operating activities

¥

6,160
(271)
3,223
921
—
1,251
(819)
(530)
2,409
(536)
913

2015

2014

¥

7,092
(236)
2,828
137
(4,499)5,672(1,094)
­—
—
(413)
1,078

$

51,333(2,258)26,858
7,675—
10,425(6,825)(4,417)
20,075(4,467)
7,608

2,329
(188)
(1,716)846
13,992529(933)(4,166)819
10,241(2,632)(28)(4,146)
(539)
3,220
403
(1,090)(1,644)
1,094
1,983

19,408(1,567)(14,300)
7,052
116,600
4,408(7,775)(34,716)
6,825
85,342

Investing Activities:
Decrease in time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Increase in long-term loans receivables
Proceeds from transfer of business
Other		 Net cash used in investing activities—(10,007)274(1,065)
(698)
548
56
(10,892)304(2,668)837(1,704)(566)—
668(3,129)—(83,392)
2,283(8,875)(5,817)
4,567
467(90,767)

Financing Activities:
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from short-term debt
Repayment of short-term debt
Cash dividends paid
Repayment of finance lease obligations
Other
		 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

22,785(17,861)
14,226(14,316)(1,209)
(304)
(3)
3,318
315
2,982
12,734
15,716

20,280(25,705)
5,722(3,712)
(804)
(329)
(14)
(4,562)479(5,229)17,963
12,734

189,875(148,842)
118,550(119,300)(10,075)(2,533)(25)
27,6502,625
24,850106,117130,967

The accompanying notes are an integral part of these statements.

28 FURUKAWA CO., LTD. Annual Report 2015

¥

¥

$

Notes to Consolidated Financial Statements
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2015 and 2014

1. Basis of Presentation
The accompanying consolidated financial statements of Furukawa
Co., Ltd. (the “Company”) and consolidated subsidiaries(together, the “Furukawa Group”) are prepared in accordancewith accounting principles generally accepted in Japan, which are
different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards, andare compiled from those prepared by the Company as required
under the Financial Instruments and Exchange Law of Japan.
The notes to the consolidated financial statements include

2. Summary of Significant Accounting Policies(1) Principles of Consolidation
The Company had 37 subsidiaries and 11 affiliates as of March
31, 2015. The consolidated financial statements included theaccounts of the Company and 37 subsidiaries as of March 31,
2015.
Compared with the previous year, the number of subsidiaries
increased by 2 subsidiaries due to establishment.
For the purpose of preparing the consolidated financial
statements, all significant inter-company transactions, accountbalances and unrealized profits among the Furukawa Group
have been eliminated.
Certain foreign subsidiaries have been included on the basisof a fiscal year ended on December 31, but prior to the parent
company’s fiscal year ended on March 31. Relevant adjustments
have been made for significant transactions with such
subsidiaries during the intervening period from January 1 toMarch 31.
Investments in subsidiaries and affiliates which are notaccounted for by the equity method are carried at cost becauseof their immaterial impact on the consolidated financial
statements.
(2) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investmentswith a maturity of three months or less when purchased.
(3) Short-Term Investments and Investment Securities
Securities other than equity securities issued by subsidiaries andaffiliates are classified into three categories: trading, held-tomaturity or other securities. The Furukawa Group does not holdany trading or held-to-maturity securities as of March 31, 2015
and 2014. Marketable securities classified as other securities arecarried at fair value with changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net
assets. Fair value is determined based on the average of themarket value during the last month of the fiscal year.

information which is not required under accounting principles
generally accepted in Japan but is presented herein as additional
information.
In preparing these statements, the Company makes certain
reclassifications and rearrangements to the consolidated financial
statements prepared in Japan in order to present these statements
in a form which is more familiar to readers outside Japan.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.

Non-marketable securities classified as other securities arecarried at cost. Cost of securities sold is determined by themoving average method.
(4) Inventories
Finished products and work in process relating to copper
products are stated at cost determined by the moving averagemethod (the balance sheet amounts of inventories are stated at
the lowered book values reflecting potential decline inprofitability). Other inventories are mainly stated at cost
determined by the average method (the balance sheet amounts
of inventories are stated at the lowered book values reflecting
potential decline in profitability).
(5) Allowance for Doubtful Accounts
In order to cover probable losses on collection, the allowance for
doubtful accounts is calculated based on the historical default
rates for normal receivables plus estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers who are experiencing financial difficulties.
(6) Provision for Deposition Field Restoration
Provision for deposition field restoration is provided to cover thestabilization costs with respect to the earthquake protection.
(7) Provision for Environmental Measures
Provision for environmental measures is provided to cover the
disposal costs anticipated to be incurred with respect to the“Law Concerning Special Measures for Promotion of Proper
Treatment of PCB Wastes.”(8) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciationof property, plant and equipment except for lease assets ismainly calculated by the straight-line method based on theestimated useful lives of the assets. The range of useful lives of

FURUKAWA CO., LTD. Annual Report 2015 29

property, plant and equipment is summarized as follows:
Buildings and structures
5 to 60 years
Machinery and equipment
2 to 22 years
Amortization is calculated by the straight-line method for
intangible assets except for lease assets.
Depreciation of lease assets arising from finance leasetransactions that do not involve transfer of ownership is
calculated by the straight-line method over the lease term withno residual value. Finance lease transactions that do not involve
transfer of ownership, entered into on and before March 31,
2008, by the Company and domestic consolidated subsidiaries
are accounted for as operating leases.
(9) Amortization of Goodwill
Goodwill is amortized by the straight-line method over five
years.
(10) Retirement Benefits
The retirement benefit obligation for employees is attributed toeach period by the straight-line method over the estimated yearsof service of the eligible employees.
Actuarial gain or loss is amortized in the year following theyear in which the gain or loss is recognized primarily by thestraight-line method over periods (mainly 15 years), which areshorter than the average remaining years of service of theemployees.
Prior service cost is being amortized as incurred by thestraight-line method over periods (mainly 15 years), which areshorter than the average remaining years of service of theemployees.
(11) Surplus on the Revaluation of Land
Pursuant to the “Law Concerning the Revaluation of Land,”land used for the Company’s business operations was revalued
on March 31, 2002. The income tax effect of the difference
between the book value and the revalued amount has beenpresented under liabilities as “Deferred tax liabilities on surplus
on the revaluation of land” and the remaining balance has beenpresented under net assets as “Surplus on the revaluation ofland, net of income taxes” in the accompanying consolidatedbalance sheets. Revaluation of land was determined based on
the official notice prices published by the Commissioner of the
National Tax Authorities in accordance with Paragraph 4, Article
2 of the “Enforcement Ordinance Concerning Land Revaluation,”with relevant adjustments. The carrying value of the land after
revaluation exceeded its fair value by ¥1,855 million ($15,458
thousand) and ¥1,849 million as of March 31, 2015 and 2014,
respectively.

30 FURUKAWA CO., LTD. Annual Report 2015(12) Income Taxes
Current income taxes comprising corporation tax, enterprise tax
and inhabitants’ taxes are provided for based on amounts
currently payable for each year. Deferred income taxes arisingfrom temporary differences between financial reporting and tax
bases of the assets and liabilities, which were measured using
the enacted tax rates and laws that will be in effect when thetemporary differences are expected to reverse, are reflected in
the consolidated financial statements.
The Company and its domestic wholly-owned subsidiaries
file a consolidated corporation tax return.
(13) Amounts per Share
Basic net income (loss) per share is computed based on the net
income (loss) available for distribution to shareholders ofcommon stock and the weighted-average number of shares ofcommon stock outstanding during the year.
Net assets per share are computed based on the net assets
excluding minority interests and the number of common stock
outstanding at the year-end.
(14) Foreign Currency Translation
Foreign currency-denominated monetary assets and liabilities
are translated into Japanese yen using the rates of exchange in
effect at the balance sheet date. Differences arising from thetranslation are included in the consolidated statements ofoperations.
The balance sheet accounts of the foreign consolidated
subsidiaries are translated into yen at the rates of exchange in
effect at the balance sheet date, except for the components of
net assets excluding minority interests, which are translated attheir historical exchange rates. Revenue and expense accounts
are translated at the average rate of exchange in effect during
the year. Differences arising from the translation are presented
as translation adjustments and minority interests in the
consolidated financial statements.
(15) Hedging Activities
The Furukawa Group uses derivative financial instruments forthe purpose of hedging the risks of adverse fluctuations inforeign exchange rates on the trade receivables, trade payables
and forecast transactions denominated in foreign currencies,
commodity prices and interest rates. All derivative financial
instruments except those below are stated at fair value andrelated gain or loss on the changes in the fair values of derivative
financial instruments is deferred as a component of net assets inthe balance sheet until the recognition of gain or loss on hedged
items when those derivative financial instruments qualify forhedge accounting.

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

Trade receivables, trade payables and forecast transactions
denominated in foreign currencies are translated at thecontracted rates if the relating forward contracts qualify forhedge accounting.
The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not carried at fair value,
but any differences paid or received on the interest rate swaps
are recognized as adjustments to interest expense or income
over the life of each swap, thereby adjusting the effective
interest rate on the hedged items.

(16) Shareholders’ Equity
The Company Law of Japan provides that an amount equal to
10% of the amount to be distributed as distributions of capitalsurplus (other than the capital reserve) and retained earnings(other than the legal reserve) be transferred to the capital reserveand the legal reserve, respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common stock
account. Such distributions can be made at any time by resolutionof the shareholders or by the Board of Directors if certain
conditions are met, but neither the capital reserve nor the legal
reserve is available for distributions.

3. Accounting Changes
The Company adopted Section 35 of “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26 of May 17, 2012)
and the main clause of Section 67 of “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25 ofMarch 26, 2015) effective from April 1, 2014. As a result, themethods for calculating the retirement benefit obligation andservice cost have been revised in the following respects: themethod for attributing projected benefits to each period has beenchanged from the straight-line method to the benefit formula
method, and the method for determining the discount rate has
been changed to use a single weighted-average discount rate

reflecting the expected timing and amount of benefit payments.
The cumulative effect of changing the method for calculating
the retirement benefit obligation and service cost was recognizedby adjusting retained earnings at April 1, 2014, in accordancewith the transitional treatment provided in Paragraph 37 of
Accounting Standard for Retirement Benefits.
As a result, the liability for retirement benefits increased by¥460 million ($3,833 thousand) and retained earnings decreasedby ¥296 million ($2,467 thousand) at April 1, 2014. The effect of
this change on operating income and income before minority
interests for the current fiscal year is insignificant.

4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience, as a matter of arithmetic computation only, at ¥120=US$1.00, the exchange rate prevailingon March 31, 2015. This translation should not be construed asa representation that yen have been, could have been or couldin the future be converted into U.S. dollars at the above or any
other rate.

FURUKAWA CO., LTD. Annual Report 2015 31

5. Investment Securities
The aggregate acquisition cost, carrying value and unrealized gain or loss pertaining to the marketable other securities as of March 31,
2015 and 2014 were as follows:
Millions of yen

Thousands of U.S. dollars

2015
Carrying value

Securities whose carrying value exceeds theiracquisition cost:
Listed stocks

¥

2015

Acquisition cost

Carrying value$ 208,817 $ 102,458 $ 106,359

Acquisition cost

Unrealized gain
(loss)

12,295¥ 12,763

Government bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

25, 058

12,295

12,763208,817

102,458

106,359

3,319

3,588

(269)

27,65829,900(2,242)

—

—

—

—

—

—

Securities whose carrying value does not exceed
their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

¥

25,058 ¥Unrealized gain
(loss)

—

—

—

—

—

—

3,319

3,588

(269)

27,65829,900(2,242)

28,377 ¥15,883 ¥12,494$ 236,475 $ 132,358 $ 104,117

Millions of yen

2014
Carrying value

Securities whose carrying value exceeds theiracquisition cost:
Listed stocks¥ 21, 598 ¥Government bonds—

Corporate bonds

Securities whose carrying value does not exceed
their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

Acquisition cost¥

Unrealized gain
(loss)

13,555 ¥
—

8,043
—

—

—

—

21, 598

13,555

8,043

1,116

1,266

(150)

—

—

—

—

—

—

1,116

1,266

(150)

22,714 ¥14,821 ¥7,893

Gain on sales of securities classified as other securities with aggregate gains for the years ended March 31, 2015 and 2014 aresummarized as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Sales proceeds

¥

2015

2014

3

¥

548

$

25

Aggregate gains

1

42

8

Aggregate losses

—

—

—

32 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

6. Short-Term Debt, Long-Term Debt and Lease Obligations
Short-term debt, most of which are unsecured, represented notes payable to banks, with the average interest rate of 0.5% and 0.6%
as of March 31, 2015 and 2014.
Long-term debt as of March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2015

Loans, principally from banks, insurance companies and government agencies,
most of which are secured, due 2016 to 2030¥

69,396
69,396¥(15,751)

Current portion of long-term debt¥

53,645

¥

2014

2015

64,47264,472$ 578,300
578,300(17,861)(131,258)

46,611$ 447,042

The average interest rates applicable to the above debt amounting to ¥69,396 million ($578,300 thousand) and ¥64,472 million
were 0.8% and 1.0% as of March 31, 2015 and 2014, respectively.
The aggregate annual maturities of long-term debt subsequent to March 31, 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Years ending March 31,

15,751$ 131,258

2017¥

14,175

118,1252018

10,87090,583

2019

23,752

197,934

2020

3,621

30,1752016

2021 and thereafter
¥

1,227

10,22569,396$ 578,300

Lease obligations as of March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2015

Lease obligations due 2015 to 2021¥

Current portion of lease obligations
¥

762

2015

2014

¥

$

1,003

6,350

762

1,003

6,350

(284)

(311)

(2,367)

478

¥

692

$

3,983

The aggregate annual maturities of lease obligations subsequent to March 31, 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Years ending March 31,

2016

¥

284

$

2,367

2017

197

1,650

2018

127

1,058

2019

88

725

2020 and thereafter

66

550

¥

762

$

6,350

FURUKAWA CO., LTD. Annual Report 2015 33

The Company and certain consolidated subsidiaries haveentered into overdraft and loan commitment agreements
amounting to ¥35,092 million ($292,433 thousand) with 23
banks and ¥31,460 million with 24 banks as of March 31,
2015 and 2014, respectively. The borrowings outstanding andthe unused balances under these credit facilities amounted
to ¥12,656 million ($105,467 thousand) and ¥22,436 million($186,967 thousand), respectively, as of March 31, 2015 andamounted to ¥12,656 million and ¥18,804 million, respectively,
as of March 31, 2014.

Assets pledged as collateral and liabilities with collateral pledged as of March 31, 2015 and 2014 were as follows:(a) Assets pledged as collateralThousands of
U.S. dollars

Millions of yen

2015

Investment securities

—

¥

1,656

¥

493

¥

1,844

1,656

Property, plant and equipment, net

2015

2014

¥

$

—

$

13,80013,8001,351(b) Liabilities with collateral pledged
Thousands of
U.S. dollars

Millions of yen

2015

¥

Long-term debt (including current portion)

2015

2014

932

¥

791

$

7,767

7. Net Assets(1) Types and number of shares issued and in treasury
Thousands of shares
As of March 31,
2014

Increase

Decrease

As of March 31,
2015

Shares issued:
Common stock		 Total

404,455——

404,455

404,455­——

404,455

329

45

—

374

329

45

—

374

Treasury stock:
Common stock (Note)		 Total

Note: The increase of 45 thousand shares of equity in treasury stock was due to the purchase of shares of less than a standard unit.

(2) Subscription rights to shares
Thousands of shares

Attribution

Parentcompany
Total

Details of
subscription rights
to shares (*)

Type of shares
to be issued upon
exercise of rights

Subscription rights
to shares due 2016

Commonstock

Note: All subscription rights to shares can be exercised.

34 FURUKAWA CO., LTD. Annual Report 2015

Millions of yen

Number of shares subject to be issued upon exercise of rights
As of March 31,
2014

Increase

Decrease

As of March 31,
2015

100,000——

100,000

100,000——

100,000

Balance as ofMarch 31, 2015

¥

53
53

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

8. Other Comprehensive Income
Reclassification adjustment and tax effects allocated to each component of other comprehensive income for the years ended March
31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

2015

2014

Unrealized holding gain (loss) on securities:
Amounts arising during the year

¥

4,600

¥

4,125

$

38,333—(42)—

Amounts before tax effect

4,600

4,083

38,333Tax effect(1,055)(922)(8,791)

Unrealized holding gain (loss) on securities

3,545

3,161

29,542

Reclassification adjustments for gains and losses included in net income

Deferred gain (loss) on hedges:
Amounts arising during the year

(2,201)(755)(18,342)

Adjustment on the acquisition cost of assets

1,853

1,323

15,442

Amounts before tax effect

(348)

568

(2,900)

97

(161)

808

(251)

407

(2,092)

206

—

1,717

2,090

1,383

17,417

Amounts arising during the year

(557)

—

(4,642)

Reclassification adjustments for gains and losses included in net income

1,037

—

8,642

Amounts before tax effect

480

—

4,000

Tax effect

(384)

—

(3,200)Retirement benefits liability adjustments

96

—

800

Share of other comprehensive income (loss) of associates accounted forusing equity method:Amounts arising during the year

250

451

2,083

(72)

(100)

(600)

178

351

1,483

Tax effect
Deferred gain (loss) on hedges
Surplus on the revaluation of land, net of income taxes:
Tax effectTranslation adjustments:
Amounts arising during the year
Retirement benefits liability adjustments:

Reclassification adjustments for gains and losses included in net income
Share of other comprehensive income (loss) of associates accounted for using
equity method
Total other comprehensive income

¥

5,864

¥

5,302

$

48,867

9. Research and Development Expenses
Research and development expenses, included in selling, general and administrative expenses and cost of sales, for the years ended
March 31, 2015 and 2014 amounted to ¥2,227 million ($18,558 thousand) and ¥2,539 million, respectively.

FURUKAWA CO., LTD. Annual Report 2015 35

10. Leases
Leases’ accounting
Finance lease transactions that do not involve transfer of ownership
1. Leased asset quality
Tangible assets
Production installations (Machinery) in the machinery segment
2. Depreciation method of leased assets
Refer to “(8) Property, Plant and Equipment and Depreciation” in “2. Summary of Significant Accounting Policies.” Finance leasetransactions that do not involve transfer of ownership, entered into on and before March 31, 2008, by the Company and its
domestic consolidated subsidiaries are accounted for as operating leases.
The pro forma amounts representing acquisition costs, accumulated depreciation and net carrying value for the machinery andequipment and others held under the finance leases currently accounted for as operating leases as of March 31, 2015 and 2014 wereas follows:
Thousands of
U.S. dollars

Millions of yen

2015

Acquisition costs¥

Net carrying value

332

¥

318

Accumulated depreciation
¥

2015

2014

14

1,361

$

¥

163

2,767
2,650

1,198
$

117

Lease payments relating to finance leases accounted for as operating leases amounted to ¥148 million ($1,233 thousand) and¥262 million for the years ended March 31, 2015 and 2014, respectively, which were equal to the depreciation expense of leased
assets computed by the straight-line method over the lease terms.
Future minimum lease payments including an interest element under the finance leases outstanding as of March 31, 2015 and2014 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Within one year

14

¥

14

¥

149

¥

163

—

Over one year

2015

2014

¥

$

117

$

117

—

14

11. Financial Instruments
1. Overview(1) Policy for financial instruments
		 In consideration of the annual financial plan, the Furukawa Group raises funds through mainly bank borrowings and bond		 issues. Further, the Furukawa Group raises short-term capital through mainly bank borrowings. The Furukawa Group uses		 derivatives for the purpose of reducing risk and does not enter into derivatives for speculative or trading purpose.
(2) Types of financial instruments and related risk
		 Trade receivables—trade notes and accounts receivables—are exposed to credit risk in relation to customers. In addition, the		 Furukawa Group is exposed to foreign currency exchange risk arising from receivables denominated in foreign currencies. In 				 principle, the foreign currency exchange risks deriving from the trade receivables denominated in foreign currencies are 				 hedged by forward foreign exchange contracts.
			 Investment securities are exposed to market risk. Those securities are composed of mainly the shares of common stock of 				 other companies with which the Furukawa Group has business relationships.
			 Substantially all trade payables—trade notes, electronically recorded obligations and accounts payables—have payment 				 due date within one year.
			 Short-term debt is raised mainly in connection with business activities, and long-term debt is taken out principally for the 				 purpose of making capital investments. Long-term debt with variable interest rates is exposed to interest rate fluctuation risk.
		 However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Furukawa 				 Group utilizes rate swap transactions as a hedging instrument for each contract. The assessment of effectiveness is omitted 		36 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s		 since it meets conditions of specific matching criteria for interest rate swap.
			 Regarding derivatives, the Furukawa Group enters into forward foreign exchange contracts to reduce the foreign currency
		 exchange risk arising from the receivables and payables denominated in foreign currencies. The Furukawa Group also enters		 into interest rate swap transactions to reduce fluctuation risk deriving from interest payable for debt bearing interest at
		 variable rates. The Furukawa Group also enters into forward commodity exchange contracts to reduce fluctuation risk of		 commodity price of inventories. Information regarding the method of hedge accounting, hedging instruments, hedged
		 items, hedging policy and the assessment of effectiveness of hedging activities is found in “(15) Hedging Activities” in “2.
		 Summary of Significant Accounting Policies.”(3) Risk management for financial instruments		 (a) Monitoring of credit risk (the risk that customers or counterparties may default)
			 In accordance with the internal policies of the Furukawa Group for managing credit risk arising from receivables, each related
			 division monitors credit worthiness of their main customers periodically, and monitors due dates and outstanding balances			 by individual customer.
				 In utilizing derivatives, the Furukawa Group has transactions with major financial institutions or trading companies which			 have high credit to reduce credit risk.
		 (b) Monitoring of market risk (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
			 For trade receivables and payables denominated in foreign currencies, the Furukawa Group identifies the foreign currency			 exchange risk for each currency on a monthly basis and principally enters into forward foreign exchange contracts to hedge
			 such risk. In order to mitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, the			 Furukawa Group enters into interest rate swap transactions.
				 For investment securities, the Furukawa Group periodically reviews the fair values of such financial instruments.
				 In conducting or managing derivative transactions, each division makes transactions by approval of the directors of			transaction-related divisions.
		 (c) Monitoring of liquidity risk (the risk that the Furukawa Group may not be able to meet its obligations on scheduled due dates)
			 Based on the report from each division, the Furukawa Group prepares and updates its cash flow plans on a monthly basis to			 manage liquidity risk.
(4) Supplementary explanation on the estimated fair value of financial instruments		The value of financial instruments is based on their quoted market place, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in “12.
Derivative Transactions” are not necessarily indicative of the actual market risk involved in derivative transactions.
2. Estimated fair value of financial instruments
	Carrying value of financial instruments on the consolidated balance sheets as of March 31, 2015 and 2014 and estimated fair value
are shown as follows. The following table does not include financial instruments for which it is extremely difficult to determine thefair value. (Please refer to Note 2 below.)
Millions of yen

Thousands of U.S. dollars

2015
Carrying value

Estimated fair value

2015
Difference

Carrying value

Estimated fair value

Difference

Assets¥ 15,716¥ 15,716—$ 130,967$ 130,967(2) Receivables—trade

24,75824,758—206,317

206,317—(3) Investment securities

28,37728,377—

236,475

236,475—

68,851

68,851—

573,759

573,759—¥ 12,099¥ 12,099—$ 100,825$ 100,825(1) Cash and cash equivalents

Total assets

¥

$

—

Liabilities(1) Payables—trade

¥

$

—

(2) Electronically recorded obligations

8,483

8,483

—

70,692

70,692—(3) Short-term debt (*1)

12,65812,658—105,483

105,483—

69,39569,555160

578,292

579,625

1,333

Total liabilities

102,635

102,795160

855,292

856,625

1,333

Derivatives (*2)¥¥(4) Long-term debt (*1)

(304)

(304)

¥

—

$

2,533

$

2,533

$

—

FURUKAWA CO., LTD. Annual Report 2015 37

Millions of yen

2014
Carrying value

Estimated fair value

Difference

Assets(1) Cash and cash equivalents¥

12,734¥

12,734¥—(2) Receivables—trade

26,69826,698—(3) Investment securities

22,71422,714—

62,146

62,146—

Total assets
Liabilities(1) Payables—trade¥(2) Electronically recorded obligations

21,556¥

21,556¥———(3) Short-term debt (*1)

12,74812,748—(4) Long-term debt (*1)

64,47264,665

193

Total liabilities
Derivatives (*2)

98,776¥(44)—

98,969
¥

(44)

193
¥

—

(*1) Current portion of long-term debt is included in long-term debt.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, with the amount in parentheses representing net
liability position.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and cash equivalents, (2) Receivables—trade		 Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities		The fair value of stocks is based on market prices. For information on securities classified by holding purpose, please refer to“5. Investment Securities” to the consolidated financial statements.
Liabilities(1) Payables—trade, (2) Electronically recorded obligations, (3) Short-term debt
		 Since these items are settled in a short period of time, their carrying value approximates fair value.
(4) Long-term debt
		The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into.
Derivative transactions
Please refer to “12. Derivative Transactions” to the consolidated financial statements.

38 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

2. Financial instruments of which it is extremely difficult to determine the fair value as of March 31, 2015 and 2014
Thousands of
U.S. dollars

Millions of yen

2015

¥

Unlisted stocks

2015

2014

6,621

¥

7,413

$

55,175

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments
are not included in the above table of “(3) Investment securities.”
3. Redemption schedule for receivables and marketable securities with maturities after March 31, 2015 and 2014 are as follows:
For the year ended March 31, 2015
Due in one
year or lessMillions of yen

Cash deposit¥

Trade notes and accounts receivable

15,638Due after one year
through five years

Due after five years
through ten years

¥

¥

—

—

Due after
ten years¥—

24,758————Investment securities
Other securities with maturity		(1) Bonds (Municipal bonds)

—

—

—

		

(2) Bonds (Corporate bonds)

—

—

—

¥

Total

40,396

¥

—

¥

—

—
¥

—

For the year ended March 31, 2014
Due in one
year or lessMillions of yen

Cash deposit¥

Trade notes and accounts receivable

12,670Due after one year
through five years

Due after five years
through ten years

¥

¥

—

—

Due after
ten years¥—

26,698

—

—

—

—

—

—

—

Investment securities
Other securities with maturity		(1) Bonds (Municipal bonds)

		(2) Bonds (Corporate bonds)

Total

—
¥

39,368

—
¥

—

—
¥

—

—
¥

—

For the year ended March 31, 2015
Thousands of U.S. dollars

Cash deposit
Trade notes and accounts receivable

Due in one
year or less

$ 130,317

Due after one year
through five years

Due after five years
through ten years

$

$

—

—

Due after
ten years$—

206,317

—

—

—

—

—

—

—

Investment securities
Other securities with maturity		(1) Bonds (Municipal bonds)

		(2) Bonds (Corporate bonds)

Total

—
$ 336,634

—
$

—

—
$

—

—
$

—

4. The redemption schedule for long-term debt is disclosed in “6. Short-Term Debt, Long-Term Debt and Lease Obligations.”

FURUKAWA CO., LTD. Annual Report 2015 39

12. Derivative Transactions
The notional amounts and estimated fair value of the derivative instruments outstanding at March 31, 2015 and 2014 for which
hedged accounting have been applied are as follows.
1. Currency-related transactions
Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2015
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

¥

1
75
5,277

—
—
—

¥

(0)
4
(57)

Accounts receivable
Accounts receivable

¥

436
344

—
—

(*)
(*)

Accounts payable

¥

6,267

—

(*)

Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2014
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

¥

80
102
11,395

—
—
—

¥

(2)
1
(83)

Accounts receivable
Accounts receivable

¥

260
459

—
—

(*)
(*)

Accounts payable

¥

3,326

—

(*)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2015
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

$

8
625
43,975

—
—
—

$

(0)
33
(475)

Accounts receivable
Accounts receivable

$

3,633
2,867

—
—

(*)
(*)

Accounts payable$

52,225—(*)

Note: The fair values of forward foreign exchange contracts are based on exchange rates or prices provided by financial institutions.
(*) The fair values by means of the allocation method for forward foreign exchange contracts are included in the fair values of thehedged accounts receivables and payables because the derivative transactions are treated as a part of hedged accounts receivables
and payables.
40 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

2. Interest-related transaction
Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2015
Contract amounts¥

32,237

Maturing after one year¥

Fair value

26,304(*)

Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2014
Contract amounts¥

29,506

Maturing after one year¥

Fair value

22,217(*)

Thousands of U.S. dollars
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2015
Contract amounts$

268,642

Maturing after one year$

Fair value219,200(*)(*) The fair values by means of the special accounting procedure for interest rate swap contracts are included in the fair values of thehedged long-term debt because the derivative transactions are treated as a part of hedged long-term debt.
3. Commodity-related transactions
Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

Raw material

As of March 31, 2015
Contract amounts¥

Raw material

Maturing after one year

3,024

—

—

—

Fair value

¥

(251)
—

Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

Raw material

As of March 31, 2014
Contract amounts¥

Raw material

Maturing after one year

5,952

—

—

—

Fair value

¥

128
—

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

Raw material
Raw material

As of March 31, 2015
Contract amounts$

Maturing after one year

25,200———Fair value$(2,092)—

Note: The fair values of forward commodity exchange contracts are based on the price provided by trading companies.
(*) Since short position trade is dependent on copper price at the time when copper will be received, contract amount and the fairvalue as of March 31, 2015 and 2014 does not exist and is not disclosed.

FURUKAWA CO., LTD. Annual Report 2015 41

13. Retirement Benefit Plans
For the year ended March 31, 2015
The employees of the Company and most of its domestic consolidated subsidiaries are covered by defined benefit corporate pension
plans and non-contributory funded employee pension plans as defined benefit plans. The employee retirement benefit plans provide
for lump-sum payments. The employee pension plans, which are funded, were instituted to replace a certain portion of the benefits
under the retirement benefit plans with respect to employees who retire at the mandatory retirement age. Certain consolidated
subsidiaries (both domestic and foreign) have defined contribution plans.
The changes in the retirement benefit obligation during the year ended March 31, 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Retirement benefit obligation at April 1, 2014
Cumulative effects of changes in accounting principle
Restated balance at April 1, 2014
Service cost
Interest cost
Actuarial loss
Retirement benefit paid
Exchange translation adjustment
Other
Retirement benefit obligation at March 31, 2015¥¥16,192460
16,652
855
259
723
(816)
258
6
17,9372015$ 134,933
3,834
138,767
7,125
2,158
6,025
(6,800)2,150
50$ 149,475

The changes in plan assets during the year ended March 31, 2015 are as follows:
Thousands of
U.S. dollars

Millions of yen

2015

Plan assets at April 1, 2014
Expected return on plan assets
Actual loss
Contributions by the Company
Retirement benefits paid
Exchange translation adjustment
OthersPlan assets at March 31, 2015¥¥

10,520
180
269
451
(553)
196
—
11,063

2015$$

87,667
1,500
2,242
3,758
(4,608)
1,633—
92,192

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as ofMarch 31, 2015 for the Company’s and the consolidated subsidiaries’ defined benefit plans:Millions of yen

Funded retirement benefit obligation
Plan assets at fair value
Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet

42 FURUKAWA CO., LTD. Annual Report 2015¥

Thousands of
U.S. dollars

2015

2015

17,343(11,063)
6,280
595
6,875

$ 144,525(92,192)
52,333
4,959
57,292

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

Liability for retirement benefits
Net liability for retirement benefits in the balance sheet

¥

6,875
6,875

$

57,29257,292The components of retirement benefit expense for the year ended March 31, 2015 are as follows:

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Retirement benefit expense

Millions of yen

Thousands of
U.S. dollars

2015

2015

¥

¥

855
259
(180)
28
1,009
1,971

$

$

7,125
2,158
(1,500)233
8,409
16,425

Note: Retirement benefit expenses for consolidated subsidiaries adopting the simplified method which assumes retirement benefit
obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at fiscal year-end areincluded in “Service cost.”
Prior service cost and actuarial loss included in other comprehensive income (before tax effect) as of March 31, 2015 are as
follows:
Thousands of
U.S. dollars

Millions of yen

2015

Prior service cost
Actuarial loss
Total

¥
¥

28
453
481

2015

$

233
3,775
4,008

$

Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax
effect) as of March 31, 2015 are as follows:
2015

Unrecognized prior service cost
Unrecognized actuarial loss
Total

¥
¥

169
4,964
5,133

2015

$
$

1,408
41,36742,775

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2015 are as follows:
2015

Bonds
StocksCash on hand and in banks
Other
Total

22%
62%
5%
11%
100%

Note:
51% of total plan assets are in a “Retirement Benefit Trust” for corporate pension plans and non-contributory funded employee
pension plans.
Matters related to the actual assumption
Major actuarial assumptions at the end of the period:
Discount rates
mainly 0.8%
Expected rates of return on plan assets mainly 2.0%
Expected rates of salary increase
3.2%–5.1%

FURUKAWA CO., LTD. Annual Report 2015 43

Defined contribution plan
The amount which a consolidated subsidiary has contributed or is obligated to contribute to the plan for the fiscal year is ¥11 million($92 thousand).
The changes in the retirement benefit obligation during the year ended March 31, 2014 are as follows:
Millions of yen

2014

Retirement benefit obligation at April 1, 2013
Service cost
Interest cost
Actuarial loss
Retirement benefit paid
Exchange translation adjustment
Other
Retirement benefit obligation at March 31, 2014¥

15,373
746
288
175
(850)
360
100
16,192¥The changes in plan assets during the year ended March 31, 2014 are as follows:
Millions of yen

2014

Plan assets at April 1, 2013
Expected return on plan assets
Actual loss
Contributions by the Company
Retirement benefits paid
Exchange translation adjustment
OthersPlan assets at March 31, 2014

¥

8,609
146
1,429
477
359
212
6
10,520¥¥The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as ofMarch 31, 2014 for the Company’s and the consolidated subsidiaries’ defined benefit plans:Millions of yen

2014

Funded retirement benefit obligation
Plan assets at fair value¥

15,593(10,520)
5,073
599
5,672

Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet
Liability for retirement benefits
Net liability for retirement benefits in the balance sheet

5,672
5,672

¥

The components of retirement benefit expense for the year ended March 31, 2014 are as follows:
Millions of yen

2014

Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Retirement benefit expense
44 FURUKAWA CO., LTD. Annual Report 2015

¥

¥

746
288
(146)
28
1,134
2,050

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

Note:Retirement benefit expenses for consolidated subsidiaries adopting the simplified method which assumes retirement benefit obligation to be equal to the benefits payable if all eligible employees voluntarily terminated their employment at fiscal year-end are included in “Service cost.”
Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax
effect) as of March 31, 2014 are as follows:
Millions of yen

2014

Unrecognized prior service cost
Unrecognized actuarial loss
Total

¥

196
5,417
5,613

¥

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2014 are as follows:
2014

Bonds
StocksCash on hand and in banks
Other
Total

16%
63%
13%
8%
100%

Note:
56% of total plan assets are in a “Retirement Benefit Trust” for corporate pension plans and non-contributory funded employee
pension plans.
Matters related to the actual assumption
Major actuarial assumptions at the end of the period:
Discount rates
mainly 1.5%
Expected rates of return on plan assets mainly 2.0%
Expected rates of salary increase
3.2%–5.1%
Defined contribution plan
The amount which a consolidated subsidiary has contributed or is obligated to contribute to the plan for the fiscal year is ¥9 million.

FURUKAWA CO., LTD. Annual Report 2015 45

14. Income Taxes
The reconciliation between the effective tax rates reflected in the consolidated statements of operations and the statutory tax rates forthe years ended March 31, 2015 and 2014 were summarized as follows :Statutory tax rate
Non-deductible expenses for tax purposes
Non-taxable dividends and other income
Inhabitants per capital tax
Equity in earnings and losses of affiliates
Amortization of goodwill and negative goodwill
Changes in valuation allowance
Different tax rates applied to subsidiaries
Decrease in differed tax liability due to the revision of statutory income tax rate
Other
Effective tax rate

2015

2014

35.6%
0.6
(1.0)
1.3
5.3
0.2
(100.3)
0.7
(4.3)
1.0
(60.9)%

38.0%
0.7
(0.9)
1.1
0.7
0.1
4.6
(0.4)
0.1
(2.6)
41.4%

Deferred tax assets and liabilities as of March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2015

Deferred tax assets:
Liability for retirement benefits
Impairment loss on property, plant and equipment
Investment securities
Net operating loss carryforwards
Land
Provision for deposition field restoration
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Statutory reserves provided for tax purposes
Gain from establishment of trust for retirement benefit plans
Land
Unrealized holding gain (loss) on securities
Capitalized interest of a foreign subsidiary
Other
Total deferred tax liabilities
Net deferred tax liabilities
Deferred tax liabilities on surplus on the revaluation of land

¥

7,616
—
1,855
8,657
1,972
765
1,418
22,283(9,522)
12,761(1,344)(3,189)(7,399)(3,056)—(128)(15,116)¥ (2,355)¥ (2,017)

2015

2014

¥

8,056
2,123
2,262
11,569
2,177
—
1,086
27,273(17,457)
9,816(1,247)(3,515)(8,158)(2,001)(807)(250)(15,978)¥ (6,162)¥ (2,253)$

63,467—15,45872,142
16,433
6,375
11,817
185,692(79,350)
106,342(11,200)(26,575)(61,658)(25,467)—(1,067)(125,967)$ (19,625)$ (16,808)

The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) was promulgated on March 31, 2015. As a result,the effective statutory tax rate used to measure the Company’s deferred tax assets and liabilities was changed from 35.6% to 33.1%
and 32.3% for the temporary differences expected to be realized or settled in the year beginning April 1, 2015 and for the temporary
differences expected to be realized or settled from April 1, 2016, respectively. The effect of the announced reduction of the effective
statutory tax rate was to decrease deferred tax liabilities, after offsetting deferred tax assets by ¥416 million ($3,467 thousand),deferred income tax by ¥263 million ($2,192 thousand), deferred gain (loss) on hedges by ¥5 million ($42 thousand), retirement
benefits liability adjustments by ¥143 million ($1,192 thousand), respectively, and increase unrealized holding gain on securities by¥300 million ($2,500 thousand). Also, deferred tax liability on surplus on the revaluation of land decreased by ¥206 million ($1,717
thousand) and surplus on the revaluation of land increased by the same amount.
46 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

15. Contingent Liabilities
Contingent liabilities as of March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2015

Notes receivable discounted and endorsed

¥

2015

2014

254

¥

367

$

2,117

Loans guaranteed

1,941

2,838

16,175

Repurchase obligation of the securitization of receivables

2,059

—

17,158

16. Write-Down of Inventories
The amount of write-down of inventories, included in cost of sales for the year ended March 31, 2015, totaled ¥165 million ($1,375
thousand). For the year ended March 31, 2014, the Company reversed write-down in the amount of ¥21 million and credited it to costof sales.
17. Other Income (Expenses)—Other, Net
Other income (expenses)—other, net for the years ended March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2015

Gain on sales of disused articles
Subsidy income
Gain on foreign exchange
Compensation income
Gain on business withdrawal
Gain on transfer of business
Payments for idle mines
Loss on foreign exchange
Provision for deposition field restoration
Other, net

¥

¥

181
132
—
819
645
530
(560)
(545)
(2,409)(260)(1,467)

2015

2014

¥

¥

237
—
600
1,095
—
—
(565)
—
—
(359)
1,008

$

1,508
1,100
—
6,825
5,375
4,417
(4,667)(4,542)(20,075)(2,167)$ 12,226

18. Segment Information
The reportable segments are constituent units of the Furukawa Group for which separate financial information is available. The Boardof Directors periodically examines these segments for the purpose of deciding the allocations of management resources and evaluating
operating performance.
The Company mainly manufactures and sells machinery, smelts on consignment and sells copper and manufactures and sells
electronic materials and chemicals.
Under the holdings company structure, each main Group company plans domestic and overseas comprehensive strategies about
their products, and the Company manages and supervises them.
The Furukawa Group therefore categorizes segments classified by products based on main Group companies. The seven reportablesegments are as follows: Industrial Machinery, Rock Drills Machinery, UNIC Machinery, Metals, Electronic Materials, Chemicals and Real
Estate.
Main products and services belonging to each segment are as follows:(a) Industrial Machinery
		 Manufacture and sale environmental machinery, pumps, industrial machinery, steel structures and heat-resistant and wear		resistant castings(b) Rock Drills Machinery
		 Manufacture and sale rock drills such as hydraulics breakers, hydraulics crushers, boring drills, tunnel and mining drill jumbos,
		 and environmental machinery(c) UNIC Machinery
		 Manufacture and sale UNIC cranes, mini crawler cranes, ocean cranes and UNIC carriers

FURUKAWA CO., LTD. Annual Report 2015 47

(d) Metals
		After buying ore, sale electrolytic copper, gold, silver and sulfuric acid which is smelted on consignment by joint smelting
company(e) Electronic Materials
		Manufacture and sale high-purity metallic arsenic, crystals, cores and coils, aluminum nitride ceramics, optical components andgallium nitrides(f) Chemicals
		 Manufacture and sale cuprous oxide, ferric polysulfate solution, aluminum sulfate, sulfuric acid, cuprous dioxide and copper		 dioxide, and sale titanium dioxide(g) Real Estate		 Trade, intermediate and lease of real estate
The accounting method used for reportable segments is the same as the method stated in “2. Summary of Significant Accounting
Policies.” Operating income (loss) of reportable segments is based on operating income in the consolidated statements of operations.
Intersegment sales and transfers are recorded based on the actual market prices.
Segment information of the Furukawa Group for the years ended March 31, 2015 and 2014 was as follows:Year ended March 31, 2015

Millions of yen
Industrial
MachinerySales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Rock Drills
Machinery

Electronic
Materials¥ 18,466 ¥ 31,432 ¥ 22,542 ¥ 27,644 ¥ 7,484
326
615
530
347
304
—
—
10
—
—
—
—
57
3,658
375
227
353
776
122
637
Millions of yen
Chemicals

48 FURUKAWA CO., LTD. Annual Report 2015

Metals¥ 16,713 ¥ 30,911 ¥ 28,367 ¥ 81,514 ¥ 5,743
2,875
9
97
364
5
19,58830,92028,46481,878
5,748¥ 1,711 ¥ 1,225 ¥ 3,615 ¥ 1,450 ¥53

Year ended March 31, 2015

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

UNIC
Machinery¥¥

Real Estate

OthersAdjustments

Consolidated

6,014 ¥ 2,536 ¥746 ¥— ¥172,544
51
138
1,644
(5,183)
—
6,065
2,674
2,390
(5,183) 172,544
268 ¥776 ¥ (130) ¥(43) ¥ 8,925¥ 15,876 ¥32,519 ¥ 3,729
205
592
65
—
—
—
—
—
135
183
7,273
42

¥47,625 ¥207,317
17
3,001
—
10
—
4,225
434
10,047

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t sYear ended March 31, 2014

Millions of yen
Industrial
MachinerySales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Rock Drills
Machinery

5,381
12
5,393
(124)

¥ 18,352 ¥ 29,931 ¥ 21,765 ¥ 28,780 ¥
330
618
516
319
—
—
24
—
—
—
34
4,215
307
750
290
449

7,394
287
—
504
131

Millions of yen
Chemicals

Real Estate

OthersAdjustments

Consolidated¥ 6,097 ¥ 1,013 ¥738 ¥— ¥163,026
45
136
1,581
(5,019)
—
6,142
1,149
2,319
(5,019) 163,026¥
316 ¥(43) ¥(60) ¥(40) ¥ 6,886¥ 15,893 ¥ 32,993 ¥ 3,955 ¥ 40,435 ¥199,408
213
252
72
8
2,615
—
—
—
—
24
—
—
236
—
4,989
131
552
30
75
2,715

Year ended March 31, 2015

Thousands of U.S. dollars
Industrial
MachinerySales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Electronic
Materials

Metals¥ 18,528 ¥ 26,843 ¥ 25,741 ¥ 78,685 ¥
2,584
176
83
402
21,11227,01925,82479,087¥ 1,851 ¥341 ¥ 3,142 ¥ 1,503 ¥Year ended March 31, 2014

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

UNIC
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials$ 139,275 $ 257,592 $ 236,392 $ 679,283 $ 47,858
23,958
75
808
3,033
42
163,233 257,667 237,200 682,317
47,900$ 14,258 $ 10,208 $ 30,125 $ 12,083 $442$ 153,883 $ 261,933 $ 187,850 $ 230,367 $ 62,367
2,717
5,125
4,417
2,892
2,533
—
—
83
—
—
—
—
475
30,483
3,125
1,892
2,942
6,467
1,017
5,308

FURUKAWA CO., LTD. Annual Report 2015 49

Year ended March 31, 2015

Thousands of U.S. dollars
Chemicals

Sales and operating income (loss):
Outside customers
Intersegment
Total
Operating income (loss)
Others:Segment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Real Estate

OthersAdjustments

Consolidated$ 50,117 $ 21,133 $ 6,217 $— $1,437,867
425
1,150
13,701(43,192)—
50,542
22,283
19,917(43,192) 1,437,867$ 2,233 $ 6,467 $ (1,083) $(358) $ 74,375$ 132,300 $ 270,992 $ 31,075 $ 396,875 $1,727,642
1,708
4,933
541
142
25,008
—
—
—
—
83
—
—
1,125
—
35,2081,525
60,608349
3,617
83,725(Related information)
Years ended March 31, 2015 and 2014
1. Information regarding products and services
Year ended March 31, 2015

Millions of yen
Copper¥Sales for outside customers

70,950

Others¥Year ended March 31, 2014

101,594

Total¥

172,544¥

163,026

Millions of yen
CopperSales for outside customers¥

68,811

Year ended March 31, 2015

Others

¥94,215

Total

Thousands of U.S. dollars
Copper$Sales for outside customers

591,250

Others$846,617

Total$ 1,437,867

2. Geographic segment information(1) Net sales
Year ended March 31, 2015
Millions of yen
Japan

¥

130,833

Asia¥

Others

24,771¥

16,940

Total¥

172,544¥

163,026

Year ended March 31, 2014
Millions of yen
Japan

¥

126,802

Asia¥

Others21,059¥15,165

Total

Year ended March 31, 2015
Thousands of U.S. dollars
Japan$ 1,090,275

Asia

$

206,425

Others$141,167

Total$ 1,437,867(2) Property, plant and equipment
The geographic segment information for the years ended March 31, 2015 and 2014 has not been presented, because the total assets
in Japan exceed 90% of consolidated totals.

50 FURUKAWA CO., LTD. Annual Report 2015

N o t e s t o C o n s o l i d at e d F i n a n c i a l S tat e m e n t s

3. Information regarding main customers
Year ended March 31, 2015
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥28,836

MetalsYear ended March 31, 2014
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥28,868

MetalsYear ended March 31, 2015
Thousands of U.S. dollars
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

$240,300

Metals

4. Impairment loss on property, plant and equipment
Millions of yen
Year ended March 31, 2015

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Impairment loss onproperty, plant andequipment

—

—

—

—

—

Year ended March 31, 2014

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Impairment loss onproperty, plant andequipment

—

—

—

—

—

Year ended March 31, 2015

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Impairment loss onproperty, plant andequipment

—

—

—

—

—

Chemicals

Real Estate

— ¥

3 ¥

Others68

Adjustments Consolidated

— ¥

71

Millions of yen
Chemicals

Real Estate

— ¥

7 ¥

Others180

Adjustments Consolidated

— ¥

187

Thousands of U.S. dollars
Chemicals

Real Estate

— $

25 $

Others567

Adjustments Consolidated

— $

592

5. Amortization of goodwill and unamortized goodwill in reportable segments
Millions of yen
Year ended March 31, 2015

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Chemicals

Real Estate

OthersBalance as of March
31, 2015

—

—

—

—

—

—

—

—

Year ended March 31, 2014

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Chemicals

Real Estate

OthersBalance as of March
31, 2014—— ¥48

—

—

—

—

—

Year ended March 31, 2015

Industrial
Machinery

Rock Drills
Machinery

UNIC
Machinery

MetalsElectronic
Materials

Chemicals

Real Estate

OthersBalance as of March
31, 2015

—

—

—

—

—

—

—

—

Adjustments Consolidated——

Millions of yen
Adjustments Consolidated— ¥48

Thousands of U.S. dollars
Adjustments Consolidated——

6. Gain on negative goodwill in reporting segments
Not applicable.

FURUKAWA CO., LTD. Annual Report 2015 51

19. Investment and Rental Properties
The Company and certain consolidated subsidiaries own office buildings for lease mainly in Tokyo and other areas. For the year ended
March 31, 2015, rental income was ¥976 million ($8,133 thousand), gain on sales of rental properties was ¥104 million ($867
thousand), loss on disposal was ¥1 million ($8 thousand) and impairment loss on rental properties was ¥71 million ($592 thousand).
For the year ended March 31, 2014, rental income was ¥132 million, gain on sales of rental properties was ¥42 million andimpairment loss on rental properties was ¥177 million.
The carrying value, net changes in the carrying value and the fair value of those properties as of and for the years ended March 31,
2015 and 2014 are as follows:Year ended March 31, 2015

Carrying value
As of March 31, 2014

Net change

Fair value
As of March 31, 2015

As of March 31, 2015

Millions of yen¥

36,473

¥

(715)

¥

35,758¥35,234

Year ended March 31, 2014

Carrying value
Net change

As of March 31, 2013

Fair value
As of March 31, 2014

As of March 31, 2014

Millions of yen¥

28,079

¥

8,394

¥

36,473¥

34,953

Year ended March 31, 2015

Carrying value
As of March 31, 2014

Net change

Fair value
As of March 31, 2015

As of March 31, 2015

Thousands of U.S. dollars$

303,942$(5,958)$297,983$

293,617

Notes:
1. The carrying value represents the acquisition cost less accumulated depreciation and cumulative impairment loss.
2. Net change in carrying value for the year ended March 31, 2015 mainly consists of increases related to acquisition of land andbuildings in the amount of ¥91 million ($758 thousand) and decreases mainly due to amortization in the amount of ¥505 million($4,208 thousand), change of use in the amount of ¥217 million ($1,808 thousand), impairment loss on rental properties in theamount of ¥71 million ($592 thousand) and sales of land in the amount of ¥37 million ($308 thousand). Net change in carrying
value for the year ended March 31, 2014 mainly consists of increases related to acquisition of land and buildings in the amount of¥9,223 million and decreases mainly due to amortization in the amount of ¥222 million and impairment loss on rental properties
in the amount of ¥177 million.
3. The fair value is mainly estimated in accordance with appraisal standards for valuing real estate.
20. Subsequent Event
The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying consolidated
financial statements, were approved at a shareholders’ meeting held on June 26, 2015:
Millions of yen

Year-end cash dividends (¥5.00 = $0.042 per share)¥

Transfer to legal reserve

$

202
¥

52 FURUKAWA CO., LTD. Annual Report 2015

2,020

Thousands of U.S. dollars

2,222

16,833
1,683$

18,516FURUKAWA CO., LTD. Annual Report 2015 53

Corporate Data
(As of March 31, 2015)

Directors and Auditors(As of June 26, 2015)
Company Name:

Furukawa Co., Ltd.

Head Office:2-3, Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8370, Japan+81-3-3212-6570 Fax: +81-3-3212-6578

Chairman and Representative Director

Nobuyoshi Soma

President and Representative Director

Naohisa Miyakawa

Senior Managing Director

Toshio Matsumoto

Tel:Outside Director

Masao Yoshida

Date of Foundation:

August 1875

Date of Establishment:

April 1918

Director

Minoru Iwata

Number of Shares Authorized:

Shigeo Matsudo

800,000,000 shares

Director

Number of Shares Outstanding:

404,455,680 shares

Director

Kiyohito Mitsumura

Number of Shareholders:

27,880

Audit & Supervisory Board Member

Yoshihito Emoto

Stock Exchange Listing:Tokyo

Audit & Supervisory Board Member

Saburo Saruhashi

Outside Audit & Supervisory Board Member Nobuyuki Tomotsune

Securities Code Number:

5715

Employees:

2,456 (Consolidated)

Stock Transfer Agent:

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Outside Audit & Supervisory Board Member Ryoji Hatsuse
Outside Audit & Supervisory Board Member Tetsuro Ueno

Principal Shareholders

Executive Officers(As of June 27, 2015)
Vice President Executive Officer

Manabu Zama

Senior Managing Executive Officer

Susumu Nakamura

Senior Executive Officer

Osamu Watanabe

Senior Executive Officer

Shigeo Matsudo

Senior Executive Officer

Kiyohito Mitsumura

Executive Officer

Yoshinari Kuno

Executive Officer

Kazuo Inoue

Executive Officer

Hiroyuki Abe

Executive Officer

Kiyoshi Sano

Executive Officer

Tatsuki Nazuka

Executive Officer

Masahiro Ogino

Executive Officer

Number of
Shares(Thousands)

Percentage ofTotal Shares(%)

Japan Trustee Services Bank, Ltd. (trust account)

33,875

8.37

The Master Trust Bank of Japan, Ltd. (trust account)

26,247

6.48

Asahi Mutual Life Insurance Co.

23,734

5.86

Seiwa Sogo Tatemono Co., Ltd.

15,034

3.71

The Yokohama Rubber Company, Limited

13,411

3.31

Sompo Japan Insurance Inc.

10,756

2.65

Fujitsu Limited

9,617

2.37

Furukawa Electric Co., Ltd.

8,777

2.17

Fuji Electric Co., Ltd.

8,620

2.13

Chuo Real Estate Co., Ltd.

6,877

1.70

Composition of Shareholders

Takeshi Miyajima

Foreign Institutions

7.69%
Other JapaneseCompanies

25.41%

Forward-Looking Statements
This annual report contains statements about the Company’s plans, strategies, performance outlooks, and the like, and includes forward-looking statements that are not historical facts. Suchstatements reflect expectations, estimates, forecasts, projections, and plans based on information
currently available to the Company and are subject to various risks, uncertainties, and assumptions.
These changing factors may cause actual results to differ materially from those projected.

URL: http://www.furukawakk.co.jp/

54 FURUKAWA CO., LTD. Annual Report 2015

Financial Instruments Firms(Securities Companies)

2.05%

Financial
Institutions

35.28%
Individuals
and Others

29.57%

Corporate History

1875

Began the operation of the Kusakura Copper Mine in Niigata(Company foundation).

1997

Established a manufacturer of
UNIC products / components
in Thailand.

1877

Began the operation of the
Ashio Copper Mine in Tochigi.

1998

Established a sales company ofrock drill products in Holland.

1900

Set up a machinery works at the
Ashio Copper Mine and enteredinto the machinery business.

2003

Established a joint company forthe manufacturing and distribution of UNIC cranes in China.

1914

Manufactured the first rock drillin Japan.

2005

1918

Spun off mining business from
Furukawa General Partnershipand established Furukawa Mining Co., Ltd.

Spun off the Machinery business,
Metals business, and Electronic
Materials and Chemicals businessand shifted to a group management structure as the Furukawa
Company Group to enhance
management.

1944

1951
1962

The first domestic rock drill
was developed at Ashio.

Bought Osaka Smelter of Toa
Chemical Smelting Co., Ltd., andestablished it as Osaka Cementation and Refining. Entered into
the chemical business.
Built the Oyama Works of theMachinery Division of the Ashio
Copper Mine in Tochigi.

1950

The Ashio Copper Mine iswhere the Furukawa Company
Group began.

At the Oyama Works, pumps
and mining machinery for copper mines were manufactured,
not only for internal use but
also to sell externally.

Built the Takasaki Works of theRock Drill Division in Gunma.

Began manufacturing oftitanium dioxide and cuprous
oxide at Osaka Cementation
and Refining.

At the Takasaki Works, rock
drills were mass produced, andwe established the position of aleading rock drill manufacturer.

Completed the Furukawa /Outokumpu flash smelting plant
at Ashio Smelting and Refining.
Completed research anddevelopment of high-purity(99.999%) metallic arsenic andcommenced with the sale of it.

1987

Bought UNIC Corporation(manufacturer of truck-mounted
cranes).

1989

The Japanese name changed
from Furukawa Kogyo Kabushiki Kaisha to Furukawa Kikai
Kinzoku Kabushiki Kaisha.

1990

Bought an American breaker sales
and manufacturing company.

Arsenic is one of the byproducts generated during
the smelting stage of copper
concentrates.

“UNIC” has become asynonym for truck-mounted
cranes in Japan.

2006

Established a rock drills sales
company in China.

2007

Formed a capital and businessalliance for the GaN semiconductor epi-wafer business with
POWDEC K.K.

2008

Set up the Nitride Semiconductors Department as a GaN andrelated nitride semiconductorrelated research organization.

2009

Built the laboratory of the Nitride
Semiconductors Department inOyama.

This is an affiliate company for
the UNIC business establishedin Rayong, Thailand, which
manufactures truck-mounted
cranes and other products.

This is an affiliate company forthe construction and mining
machinery business established in
Utrecht, Holland, which distributes
rock drills and other products.

This is an affiliate company for
the UNIC business establishedin Taian, Shandong, China,
which manufactures and distributes truck-mounted cranes
and other products.

Made Tohpe Corporation, which
manufactures and distributes
paints and chemicals, into a consolidated subsidiary.

2010

Acquired interest in Canadiancopper mine

2011

Established a sales company ofrock drill products in India.

2012

Established a sales company ofrock drill products in Panama.

In 2009, the laboratory of the
Nitride Semiconductors Department was built in Oyama.

With the sale of all of its shares inFurukawa Commerce Co., Ltd.,the Group has withdrawn fromthe fuels business.

2013

The Group exited the paints business with the sale of all of its sharesin Tohpe Corporation.

2014

Completed Muromachi Furukawa
Mitsui Building in Nihonbashi, Tokyo.
Established the Tsukuba Development Center, which integrates atechnology research operation.

Muromachi Furukawa Mitsui Building, consisting of a commercial
facility (COREDO Muromachi 2),
offices, and rental accommodation.

“140 Years” Corporate Profile Videos Released
This year, we updated our corporate profile videos to mark the 140th anniversary of our founding. Consisting of four chapters, thevideos enable viewers to gain a quick understanding of Furukawa’s roots, social interactions, and product range. Please go to the “Investor Relations” section of our English website, click on “Welcome to the Furukawa Planet” icon, and scroll down to the videos.
The entire four-part compilation can also be viewed via YouTube:
https://www.youtube.com/watch?v=U9vi3JBMEDI●FURUKAWA CO., LTD. Annual Report 2015 55

2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8370, Japan