Fuji Electric Report Financials

Consolidated Financial Highlights
Thousands of
U.S. dollars*1

Millions of yen

Years ended March 31

2014

2015

2016

2017

2018

2018

Operating Results
Net sales
Japan
Overseas
Operating income
Net income attributable to owners of parent¥759,911
582,223
177,688
33,136
19,582¥810,678
605,763
204,915
39,31627,978¥813,550
597,757
215,793
45,00630,644¥837,765
632,723
205,042
44,70940,978¥893,451
674,744
218,707
55,962
37,763$8,428,790
6,365,513
2,063,277
527,944356,263

R&D and Capital Investment
R&D expenditures
Plant and equipment investment*2
Depreciation and amortization*3¥ 32,029
26,91630,849¥ 35,023
29,041
33,615¥ 35,949
27,65029,723¥ 34,910
27,14929,445¥ 35,620
26,46530,151$   336,045
249,679
284,451

Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
Cash flows from financing activities¥ 53,651(9,649)44,002(50,570)¥ 51,459(22,750)
28,708(33,827)¥ 48,450(19,410)29,040(31,567)¥ 58,185
9,748
67,934(56,082)¥ 53,146(14,550)
38,596(46,887)$   501,386(137,265)
364,121(442,336)

Financial Position
Total assets
Total net assets
Shareholders’ equity
Net interest-bearing debt
Interest-bearing debt

¥810,774
251,225
227,181200,340
233,753¥904,522
319,636
290,339
194,579
226,474¥845,378
260,980
230,399
189,374
220,213¥886,663
323,863291,216
141,578
183,465¥918,859
366,546
330,636
130,177
163,507$8,668,487
3,457,989
3,119,207
1,228,094
1,542,527

4.4
23.4
9.3
2.5
28.0
0.9
1.0

4.8
25.3
10.8
3.3
32.1
0.7
0.8

5.5
26.5
11.8
3.5
27.3
0.8
1.0

5.3
24.5
15.7
4.7
32.8
0.5
0.6

6.3
24.5
12.1
4.2
36.0
0.4
0.5

—
—
—
—
—
—
—

Per Share Data
Net income
Net assets
Cash dividends¥ 27.41317.96
7.00¥ 39.16406.399.00¥ 42.90322.5210.00¥ 57.36407.6811.0¥ 52.87462.9014.00$0.4994.367
0.132

OthersEmployees
Japan
Overseas

25,52418,022
7,502

25,74017,814
7,926

26,503
17,716
8,787

27,00917,704
9,305

—
—
—

Financial Indicators
Ratio of operating income to net sales (%)
Ratio of overseas sales to net sales (%)
ROE (Return on equity) (%)
ROA (Return on assets) (%)
Equity ratio (%)
Net debt-equity ratio (times)*4
Debt-equity ratio (times)*5

Yen

U.S. dollars*1

Headcount

26,50817,635
8,873*1 The U.S. dollar amounts represent the arithmetic results of translating yen into dollars at ¥106=U.S.$1, the approximate exchange rate at March 31, 2018.
*2 Plant and equipment investment is the total of investment in tangible fixed assets, including acquisition amounts for lease contracts.
*3 Depreciation and amortization expense is the total of the depreciation of tangible fixed assets and amortization of intangible assets.
*4 Net debt-equity ratio: Net interest-bearing debt (interest-bearing debt + lease obligations – cash and cash equivalents) / Net assets*5 Debt-equity ratio: Interest-bearing debt / Net assets

Contents
Consolidated Financial Highlights.................................................... 01
Management’s Discussion and Analysis.......................................... 02
Consolidated Balance Sheets.......................................................... 09
Consolidated Statements of Income................................................ 11
Consolidated Statements of Comprehensive Income....................... 12
Consolidated Statements of Changes in Net Assets........................ 13
Consolidated Statements of Cash Flows......................................... 14
Notes to the Consolidated Financial Statements.............................. 15
Independent Auditor’s Report.......................................................... 38

01 Fuji Electric Report Financials 2018

Management’s Discussion and Analysis
Cost of Sales, Selling, General and Administrative
Expenses and Operating Income
The cost of sales increased by 6.0% year on year, to ¥661,824
million, and the ratio of cost of sales to net sales decreased by
0.5 percentage point, to 74.1%.
Selling, general and administrative expenses increased by
4.1% year on year, to ¥175,665 million. The ratio of selling,
general and administrative expenses to net sales decreased
by 0.5 percentage point, to 19.7%.
Operating income increased by ¥11,253 million year on
year, to a record high of ¥55,962 million, due to higher net
sales and production volumes as well as the benefits of cost
reductions. The operating margin was increased by 0.9­percentage point, to 6.3% year on year.

Overview
During fiscal 2017, the year ended March 31, 2018, a gentle
overseas recovery trend was seen in the Company’s operating
environment supported by strong demand for machine tools androbots, which was driven by increased production facility automation and labor-saving needs in China and other countries.
In Japan, there was a modest recovery trend due to thestrong demand resulted from increases in replacements of aged
equipment and investments in automation and labor saving.
In this environment, we moved ahead with the FY2018
Medium-Term Management Plan, Renovation 2018. In­accordance with the plan’s basic policy of “further renovationof Fuji Electric,” we are implementing the growth strategies ofstrengthening the power electronics systems business, further
enhancing manufacturing capabilities, and pursuing improved
profitability by re-energizing the Pro-7 Activities that involve
reviewing all costs associated with business activities.

Non-Operating Income (Expenses) and Ordinary Income
Non-operating income (net) was ¥85 million, a ¥1,502 million
decrease from ¥1,587 million in the previous fiscal year. Thisdecrease was mainly due to a ¥1,761 million increase in­foreign exchange losses and a ¥242 million decrease in­dividends income, which counteracted the benefits of a ¥514
million decrease in interest expense.
As a result, ordinary income grew ¥9,751 million year on
year, reaching a new record high of ¥56,047 million.

Financial Performance
Net Sales
Net sales in fiscal 2017 increased by 6.6% year on year,to ¥893,451 million, as a result of strong demand.
Sales in all business segments increased year on year,
particularly in the Power Electronics Systems—Industry
Solutions, Electronic Devices, and Food and Beverage
Distribution segments. Domestic sales increased by 6.6%,
to ¥674,744 million. Overseas sales increased by 6.7%,
to ¥218,707 million.
The ratio of overseas sales was 24.5%, approximately
the same level as the previous fiscal year.

Net Sales /Ratio of Overseas Sales to Net Sales(Billions of yen)

893.5
810.7 813.6

40

26.5

(Billions of yen)
70.0

6.3

60.0
30

24.5

24.5

5.5

50.0

40.0

500.0

20

250.0

10

15/3

56.0

45.0

4.4

16/3

17/3

18/3

Net Sales (left)
Ratio of Overseas Sales to Net Sales (right)

0

4

3

20.0

2

10.0

1

15/3

16/3

17/3

4.9

3.8

41.0

5

4.2
37.8

3.5

4

5

44.7

33.1

14/3

(%)

50.0

40.0

30.0

0

(Billions of yen)

6

39.3

23.4

14/3

5.3

7

4.8

25.3

0

(%)

837.8

759.9
750.0

Net Income Attributable to Owners of
Parent / Ratio of Net Income Attributableto Owners of Parent to Net Sales

Operating Income / Ratio of
Operating Income to Net Sales(%)

1,000.0

Extraordinary Income (Loss), Income before Income Taxes
and Non-Controlling Interests
Extraordinary income totaled ¥1,900 million and included
a gain on sales of noncurrent assets and a gain on sales ofinvestment securities. This represented a ¥17,915 million
year-on-year decrease primarily due to a reduction in gainon sales of investment securities.
Extraordinary loss totaled ¥1,142 million and included aloss on disposal of noncurrent assets and a loss on devaluation of investment securities. This represented a ¥1,026 million
year-on-year decrease due to the impairment loss recorded in
the previous fiscal year.

18/3

Operating Income (left)
Ratio of Operating Income to Net Sales (right)

0

30.0

2.6

30.6
28.0

3

19.6
20.0

2

10.0

1

0

14/3

15/3

16/3

17/3

18/3

0

Net Income Attributable to Owners of Parent (left)
Ratio of Net Income Attributable to Owners of
Parent to Net Sales (right)

Fuji Electric Report Financials 201802• In the ED&C components business, net sales and operating
results improved year on year as a result of strong demand
from machinery manufacturers, including manufacturers ofmachine tools, and overseas semiconductor manufacturers.
Orders received in fiscal 2017 (Power Electronics
Systems—Energy Solutions segment of Fuji Electric Co., Ltd.,
non-consolidated-basis) totaled ¥137.3 billion.

Net Income
Income before income taxes decreased by ¥7,138 million year
on year, to ¥56,805 million. After subtracting ¥14,804 million inincome taxes (the net of income taxes-current and income
taxes-deferred) and ¥4,238 million in net income attributable
to non-controlling interests, net income attributable to ownersof parent decreased by ¥3,215 million from the previous fiscal
year, to ¥37,763 million.

Power Electronics Systems—Industry Solutions
Net sales: ¥315,863 million (an increase of 10.4% year on year)
Operating income: ¥18,273 million (an increase of ¥4,324
million year on year)
Net sales and operating income increased year on year.
Performance was driven by the factory automation business,
which benefited from strong demand for the automation of
production facilities in Japan and China, and the process
automation business, which benefited from strong replacement demand in the Japanese market, as well as the IT­solutions business.
• In the factory automation business, net sales and operating
results improved year on year due to strong conditions in theJapanese and Chinese markets for inverters and factory
automation components.
• In the process automation business, net sales and operating
results improved year on year because of the strong replacement demand in the Japanese market.
• In the environmental and social solutions business, net sales
and operating results improved year on year as a result ofstrong demand for electrical equipment for railcars mainly in
Asian countries.
• In the equipment construction business, net sales increased
year on year due to strong performance in air-conditioning
equipment and electricity and information distribution operations. Operating results, however, worsened year on year asa result of an unfavorable sales mix.

Results by Business Segment
Power Electronics Systems—Energy Solutions
Net sales: ¥224,100 million (an increase of 2.4% year on year)
Operating income: ¥14,662 million (an increase of ¥937 million
year on year)
Net sales and operating income increased year on year.
Solid performance in the ED&C components business supported by increased machine tool demand outweighed theimpacts of weak demand in the energy management businessand the power supply systems business.
• In the energy management business, net sales decreased
year on year primarily due to a decrease in smart meter sales
volumes while operating results were relatively unchanged
from the previous fiscal year due to the benefits of cost
reduction efforts.
• In the transmission and distribution systems business, net
sales increased year on year due to contributions from largescale power and industrial field orders from overseas.
However, operating results worsened year on year as aresult of an unfavorable sales mix.
• In the power supply systems business, net sales decreased
year on year due to weak demand for power conditioning
systems used for solar power generation systems. Operating
results improved year on year due to the benefits of cost
reduction efforts.

Cash Dividends per Share /Net Income per ShareNet Sales by Segment

Operating Income (Loss) by Segment(Yen)(Billions of yen)(Billions of yen)

57.36

60.0

1,000.0

52.87
50.0

837.8

117.8

109.6

42.90

126.9

118.5

39.16

600.0

70.0

60.4

59.1
800.0

40.0

893.5

96.9

93.8

OthersFood andBeverageDistribution
Electronic
Devices
Power andNew Energy

30.0

27.41

14.00

10.0 7.00

0

14/3

286.0

400.0

20.0

9.00

15/3

315.9

224.1

218.7

10.00 11.00
–48.0

0

16/3

17/3

Cash Dividends per ShareNet Income per Share

03 Fuji Electric Report Financials 2018

18/3

–200.0

17/3

–48.4

18/3

44.7

50.0

2.1
6.0

13.7

8.0

40.0

2.9
6.2

5.5

7.5

OthersFood andBeverageDistribution
Electronic
Devices
Power andNew Energy

30.0Power Electronics
Systems-Industry
Solutions

200.0

56.0
60.0

Power Electronics
Systems-Energy
SolutionsElimination
andCorporate

18.3

13.9

20.0

10.0

13.7

14.7

0

–6.6

–5.3

–10.0

17/3

18/3

Power Electronics
Systems-Industry
SolutionsPower Electronics
Systems-Energy
SolutionsElimination
andCorporate• In the IT solutions business, net sales and operating results
improved year on year due to increases in orders from theacademic sector and large-scale orders from the public sector.
Orders received in fiscal 2017 (Power Electronics Systems—
Industry Solutions segment of Fuji Electric Co., Ltd.,­non-consolidated-basis) totaled ¥161.3 billion.

Food and Beverage Distribution
Net sales: ¥117,753 million (an increase of 7.5% year on year)
Operating income: ¥6,234 million (an increase of ¥205 million
year on year)• In the vending machine business, although the revisionof customers’ plans caused performance in the Chinese
market to remain around the same level as in the previous
fiscal year, overall net sales and operating results improved
year on year due to strong demand from customers in theJapanese market.
• In the store distribution business, net sales increased year
on year due to strong demand for store equipment for use
in convenience stores. However, operating results worsened
year on year as a result of an unfavorable sales mix.
Orders received in fiscal 2017 (Food and Beverage Distribution
segment of Fuji Electric Co., Ltd., non-­consolidated-basis)
totaled ¥105.5 billion.

Power and New Energy
Net sales: ¥96,879 million (an increase of 3.2% year on year)
Operating income: ¥5,521 million (a decrease of ¥1,958 million
year on year)• Net sales increased year on year because the benefits oflarge-scale orders for thermal power generation systems
counteracted the impacts of the decreases in large-scaleorders for hydro power generation systems and solar power
generation systems. However, operating income decreased
year on year as a result of an unfavorable sales mix.
Orders received in fiscal 2017 (Power and New Energy
segment of Fuji Electric Co., Ltd., non-consolidated-basis)
totaled ¥88.7 billion.

Others
Net sales: ¥60,406 million (an increase of 2.2% year on year)
Operating income: ¥2,861 million (an increase of ¥795 million
year on year)

Electronic Devices
Net sales: ¥126,871 million (an increase of 7.1% year on year)
Operating income: ¥13,699 million (an increase of ¥5,669
million year on year)• In the electronic devices business, net sales and operating
income improved year on year as a result of solid demand
from the automotive field coupled with the increased
demand for power semiconductors from the industrial field,
which was a result of an increase in needs for automation,
labor saving, and energy saving in the Chinese andJapanese markets.
Orders received in fiscal 2017 (Electronic Devices segmentof Fuji Electric Co., Ltd., non-consolidated-basis) totaled¥93.9 billion.

R&D Expenditures / Ratio of R&D
Expenditures to Net Sales(Billions of yen)
40.0

35.0

35.9

34.9

Total Net Assets / ROE(%)(Billions of yen)(Billions of yen)

8

40.0

4.2

400.0

366.5

33.6

6

4.4

30.8
29.0
30.0
26.9

29.7 29.4
27.7 27.1

26.5

4

300.0

10.0

15/3

16/3

17/3

30

261.0

251.2

200.0

20.0

20

15.7

9.3

14/3

323.9

319.6

30.2

40

4.0

20.0

0

(%)

35.6

30.0

4.3

R&D
Fuji Electric is focused on research and development activities
for creating competitive components and systems centered on
power semiconductor technologies and power electronics
technologies and activities for developing solutions that produce
value for customers by combining fundamental technologies.
The Company has reorganized its R&D structure to accelerate
R&D activities. Product development functions are delegatedto the respective business groups while the corporate R&D
group handles technology marketing, advanced research, andbasic research.

Plant and Equipment Investment /Depreciation and Amortization

32.0

4.2

R&D Investment and Plant andEquipment Investment

18/3

R&D Expenditures (left)
Ratio of R&D Expenditures to Net Sales (right)

2

10.0

0

0

10.8

12.1

11.8

100.0

14/3

15/3

16/3

Plant and Equipment Investment
Depreciation and Amortization

17/3

18/3

0

10

14/3

15/3

16/3

17/3

18/3

0

Total Net Assets (left)
ROE (right)

Fuji Electric Report Financials 201804

The Company’s R&D expenditures in fiscal 2017 totaled¥35,620 million.
As of March 31, 2018, the number of industrial property
rights which were registered in Japan and overseas and held
by Fuji Electric stood at 12,134.

In back-end processes, capital expenditures for production equipment to increase production of intelligent power
modules were conducted at domestic and overseas bases.
As for the Food and Beverage Distribution segment,
investments were conducted in the rationalization of in-houseproduction of new vending machine models and in convenience store equipment testing facilities for the purpose ofincreasing sales in the store distribution business. As for­overseas, we completed the first phase of construction at thesecond Dalian factory, a project that is intended to expand our
vending machine operations in China.

Plant and Equipment Investment
Plant and equipment investment, including leases, amounted
to ¥26.5 billion in fiscal 2017. These expenditures weredirected toward new product startups, new development
investments, and production capacity expansions.
Major investments were as follows.
The Power Electronics Systems—Energy Solutions­segment conducted investments for purposes that included
production capacity increases for boosting product competitiveness in the transmission and distribution systems businessand automation of testing processes in the power supply
systems business. In the ED&C components business, meanwhile, we invested in new earth-leakage circuit breaker andmagnetic switch product lines that contribute to labor savings.
In the Power Electronics Systems—Industry Solutions
segment, investments were directed toward energy-saving
factory equipment.
In the Power and New Energy segment, the Company
conducted investments for upgrading machining equipment
as part of its measures for rationalizing in-house production.
Expenditures in the Electronic Devices segment included
new investments related to development equipment for SiC
devices, newly developed products, and new technologies. In
addition, we invested in mass-production of power semiconductor chips at the Matsumoto Factory and the Yamanashi
Factory and also made business continuity plan-related capital
expenditures at Fuji Electric Tsugaru Semiconductor Co., Ltd.

Total Assets / ROA(Billions of yen)
1,000.0

(%)

904.5
845.4

810.8

886.7

918.9

10

Financial Position
Total Assets
Total assets on March 31, 2018, stood at ¥918,859 million,
an increase of ¥32,196 million from the end of the previous
fiscal year.
Current Assets and Current Liabilities
Total current assets increased by ¥23,764 million from theprevious fiscal year-end, to ¥536,234 million. This increase ismainly due to increases of ¥17,408 million in trade receivablesand ¥7,345 million in inventories, which were partially offset bythe ¥8,557 million decrease in cash and cash equivalents.
Total current liabilities stood at ¥405,236 million on March
31, 2018, a decrease of ¥7,168 million year on year. Thisdecrease is mainly because the increase of ¥18,670 million intrade payables was offset by decreases of ¥4,484 million in
short-term debt, ¥8,659 million in current portion of long-term
debt, and ¥22,758 million in income taxes payable.

Equity Ratio

Interest-bearing Debt /Debt-equity Ratio(%)(Billions of yen)
40.0

36.0

8
30.0

3

233.5

28.0
27.3

600.0

300.0

32.8

32.1

800.0

226.5

220.2
183.5

200.0

3.3

400.0

4.2

3.5

20.0

1.0

1.0

4

2.5

100.0

0.5

2

14/3

15/3

16/3

17/3

Total Assets (left)
ROA (right)

05 Fuji Electric Report Financials 2018

18/3

0

0

14/3

15/3

16/3

17/3

18/3

0

14/3

15/3

1

0.6

0.8

10.0
200.0

2

163.5

6

4.7

0

(Times)

16/3

Interest-bearing Debt (left)
Debt-equity Ratio (right)

17/3

18/3

0

Noncurrent Assets
Total noncurrent assets increased by ¥8,432 million year on
year, to ¥382,625 million on March 31, 2018. The combined
total of net property, plant and equipment and intangible
assets were ¥193,931 million, a decrease of ¥114 million year
on year. Total investments and other assets amounted to¥188,556 million, an increase of ¥8,547 million year on year.
This increase is mainly due to a ¥8,329 million increase ininvestment securities attributable to valuation difference on
available-for-sale securities.
Long-term Liabilities
Total long-term liabilities decreased by ¥3,319 million from theprevious fiscal year-end, to ¥147,077 million. Deferred tax
liabilities and lease obligations increased by ¥3,158 million and¥2,081 million, respectively, but these increases were offset bya ¥9,773 million decrease in long-term debt.
Net Assets
Net assets as of March 31, 2018, totaled ¥366,546 million, an
increase of ¥42,683 million from the previous fiscal year-end.
This increase was attributable to an increase of ¥29,228 ­million
in retained earnings combined with upward adjustments of¥4,914 million from valuation difference on available-for-salesecurities and ¥2,234 million from remeasurements of defined
benefit plans. As a result, the equity ratio stood at 36.0%, anincrease of 3.1 percentage points year on year.
Debt
Interest-bearing debt as of the fiscal year-end totaled¥163,507 million, a decrease of ¥19,958 million year on year.
The ratio of interest-bearing debt to total assets was 17.8%,
representing a 2.9 percentage-point decrease from the­previous fiscal year-end.

Cash Flow
Consolidated free cash flow (net cash provided by (used in)operating activities + net cash provided by (used in) investing
activities) was a positive ¥38,596 million, a ¥29,338 million
decrease from the previous fiscal year’s positive free cash flowof ¥67,934 million.
Cash Flows from Operating Activities
Net cash provided by operating activities was ¥53,146 million,
compared with ¥58,185 million in the previous fiscal year.
Major factors increasing cash included the recording ofincome before income taxes and an increase in trade payables. Major factors decreasing cash included income taxes
paid and an increase in trade receivables.
This was a decrease of ¥5,039 million year on year.
Cash Flows from Investing Activities
Net cash used in investing activities was ¥14,550 million,
compared with net cash provided by investing activities of¥9,748 million, in the previous fiscal year. This was primarilya result of the purchase of property, plant and equipment.
In fiscal 2017, investing activities resulted in a net outflow
while investing activities in fiscal 2016 resulted in a net inflow.
When the amounts of this net outflow and this net inflow areadded together, the total is ¥24,298 million.
Cash Flows from Financing Activities
Net cash used in financing activities was ¥46,887 million,
compared with ¥56,082 million in the previous fiscal year.
This was principally due to the repayment of long-term loans­payable and the repayment of lease obligations.
This was a decrease of ¥9,195 million year on year.

Cash Flows

Free Cash Flow /Cash and Cash Equivalents(Billions of yen)(Billions of yen)

80.0

80.0

60.0 53.7

51.5

58.2
48.5

67.9

53.1
60.0

40.0

20.0

9.7

44.0

0

40.0

–9.6
– 20.0

–22.8

–14.6

–19.4

41.9

38.6
33.3

33.4 31.9 30.8
28.7 29.0–33.8 –31.6– 40.0

–46.9

–50.6

–56.1

– 60.0– 80.0

14/3

20.0

15/3

16/3

17/3

18/3

Cash Flows from Operating Activities
Cash Flows from (Used in) Investing Activities
Cash Flows from (Used in) Financing Activities

0

14/3

15/3

16/3

17/3

18/3

Free Cash Flow
Cash and Cash Equivalents

Fuji Electric Report Financials 201806

Risk Factors
Fuji Electric works to mitigate business risk and other risks in asystematic and methodical manner. However, there are various
risks, such as those listed below, which could have a negative
effect on the operating results and financial position of Fuji Electric.
As of March 31, 2018, the following factors were judged tohave a potential future effect on the operations of Fuji Electric.
(1) Risks Related to Changes in the Operating Environment(a)	In addition to increasing raw material and components
prices against the background of a weak yen, such changes
as the drastically increasing demand in emerging nations
may result in tightened supply and demand as regards
materials and raw materials. Consequently, although
Fuji Electric strives to lessen the risk of rising raw material
prices through commodity swap transactions, significant
increases in these prices could have a negative effect on
the operating results of Fuji Electric.
(b)	Fuji Electric is developing operations actively in overseas
markets, focusing particularly on expanding sales in China
and other Asian markets. In addition, economic trends inJapan, such as private sector capital investment and public
investment affect the Company significantly. In order tominimize the effect on operating results of overseas anddomestic market trends, the Company is implementing
overall cost and expense reductions. However, a deteriorationof the business climate or a change of economic policy inChina, a dramatic change in product supply and demandor intensified competition in the market, or a steep decreasein price levels as a result of such factors could affectFuji Electric’s operating results.
(c)	Based on an established set of management criteria,
Fuji Electric systematically employs forward-exchange
contracts to minimize the risk of exchange rate fluctuations
on its operating results. However, the forward-exchange
contract policy is not capable of entirely mitigatingexchange rate risk. Consequently, fluctuations in exchange
rates, primarily between the yen and the U.S. dollar, could
have a negative effect on the operating results and financial
position of the Company.
(d)	Fuji Electric’s interest-bearing debt totaled ¥163,507 million
as of March 31, 2018. A higher-than-anticipated increase
in interest rates could lead to a significant additional interest
payment burden, which could have a negative effect on
the operating results of the Company.
(e)	Trends in the financial markets or deterioration in Fuji Electric’s
financial indicators could impact on Fuji Electric’s fundprocurement or interest payments, for example by prompting
early repayment due to infringement on financial covenants
relating to certain loans. Such an event could affectFuji Electric’s operating results and financial position.

07 Fuji Electric Report Financials 2018

(2) Risks Related to Product Quality
Fuji Electric has put in place a quality assurance systemdesigned to ensure the highest level of quality for all of the
products that it manufactures and sells. Although the Company
has taken precautions in the form of product liability insurance
to provide compensation for product liability claims, in theevent that major defects are found in any Fuji Electric products
due to unforeseen factors, there could be a negative effect on
the Company’s operating results and financial position.
(3) Risks Related to Investments
Fuji Electric concentrates its management resources on quickly
identifying potential business growth areas and conducts investment in facilities and R&D with the objective of expanding anddeveloping the Company’s business. The large-scale investment
necessary and short product cycles in the semiconductors andmagnetic disks fields, in particular, as well as shifts in productdemand and intensifying competition increase the possibility
that the Company might not be able to recoup its investments.
Such events could thereby have a negative effect on the
Company’s operating results.
(4) Risks Related to Technology Development
Fuji Electric makes a concerted effort to develop technologythat matches the needs of the market. However, there is apossibility that competing companies will gain an advantage
through faster development, or that the Company will be
unable to bring products to market in a timely manner should
development not progress according to plan. Such events
could thereby have a negative effect on the Company’s
operating results.
(5) Risks Related to Overseas Business Activities
Fuji Electric is seeking to expand its overseas presence, witha particular focus on Asia, including China. Consequently, theCompany is exposed to the following risks, which could havea negative effect on the Company’s operating results andfinancial position:-	Unforeseen changes in laws and regulations as well as tax
systems that could have a detrimental effect on the Company-	Disadvantages arising from political conditions-	Social turmoil related to terrorist incidents, war, andother events(6) Risks Related to Intellectual Property
Fuji Electric effectively manages its intellectual property rights
and develops new products and technologies in a manner that
does not infringe on third-party patent rights. However, since
the pace of technological innovation is accelerating and theCompany’s operations are becoming more global, the possibilityof disputes over intellectual property rights is increasing.
A dispute of this nature could have a negative effect on the
Company’s operating results and financial position.

(7) Risks Related to Business Alliances
Fuji Electric actively collaborates with third-party entities
in mergers, tie-ups, and other forms of alliances with theobjective of enhancing competitiveness in each of its fieldsof business. Cooperative relations are essential to the successof such collaborations.
However, differences in business systems, corporate cultures,or other aspects could impede the smooth integration ofbusiness strategies, technologies, products, personnel,
or other elements necessary for a successful collaboration.
Such circumstances could thereby have a negative effecton the Company’s operating results.
(8) Risks Related to Human Resources
The business activities of Fuji Electric depend heavily on its
human resources. Retaining and training superior personnel
in such fields as technology, production, sales, and administration is essential to the growth of the Company. Should theCompany be unable to retain and/or train such necessary
human resources, this could have a negative effect on the
Company’s operating results.
(9) Risks Related to the Leakage of Personal Information
As a part of its business activities, Fuji Electric handles personal
information about numerous individuals, including customers,
suppliers, and employees. Fuji Electric has formulated andstrictly enforces thorough internal regulations regarding thegathering, use, and management of personal information.
However, the Company cannot entirely rule out the possibility
that such information could be leaked due to unforeseen
circumstances. Any leak of this kind could damage trustin Fuji Electric and thereby have a negative effect on the
Company’s operating results.

(12) Risks Related to Retirement Benefit Liabilities
Fuji Electric has a lump-sum payment plan and a corporate
pension plan for its employees when they retire. Retirement
benefit costs and liabilities are calculated on the assumptionthat they are accepted as reasonable on the basis of actuarial
calculations. Fuji Electric and certain domestic consolidated
subsidiaries have also entrusted listed marketable securities
to employee retirement benefit trusts. Consequently, changes
in the discount rate, the expected rate of return on pension
assets and stock prices that are used as the basis of computing
pension benefit obligations, differences between these expectations and actual performance, changes in the prices of
entrusted listed marketable securities, and other items could
have a negative effect on the operating results and financial
position of Fuji Electric.
(13) Risks Related to ComplianceFuji Electric conducts business in a variety of fields andregions throughout the world, and as such is subject to thelaws and regulations of numerous countries. The Company
has put in place an appropriate internal control system toensure compliance, but the possibility of legal violations cannot
be discounted entirely. Should such a violation occur, this could
have a negative effect on the Company’s social credibility
and/or operating results.
(14) Risks Related to Lawsuits and Other Legal Proceedings
Fuji Electric, in the course of its business, could become thesubject of a lawsuit or other legal proceeding, and could asa result unexpectedly become liable for the payment of large
amounts of compensation. Depending on the content of sucha decision, this could have a negative effect on the Company’s
operating results.

(10) Risks Related to Major Natural Disasters
Fuji Electric has a network of bases throughout the world. In
the event of a major natural disaster, production facilities could
be damaged, operations at manufacturing facilities could be
halted, shipments of products could be delayed, and otherrelated problems could occur. These events could thereby
have a negative effect on the operating results and financial
position of the Company.
(11) Risks Related to Soil Contamination
Based on the international standard for environmental protection systems, the Company works to prevent, measure, andmonitor soil contamination at its operating sites. Prior to selling
any land, the Company carries out soil surveys and takesother appropriate steps in accordance with relevant laws andregulations. However, as a result of these measurements andsurveys, the Company may incur costs for soil remediation
measures, which could have a negative effect on the operating
results of the Company.

Fuji Electric Report Financials 201808

Consolidated Balance Sheets
As of March 31, 2018 and 2017

Millions of yen

Thousands of
U.S. dollars(Note 3)

2018

2017

2018

¥   33,329
42
287,084(1,280)149,757
17,76349,539536,234¥   41,886
158
269,676(1,226)
142,412
17,97541,589512,470$    314,433
398
2,708,341(12,084)
1,412,811
167,576
467,343
5,058,818

Less accumulated depreciation
Net Property, Plant and Equipment

34,947240,044
204,974
77,024
2,401
559,390(384,790)
174,600

34,963
237,460
204,451
70,084
2,763
549,721(376,204)
173,517329,6902,264,572
1,933,725
726,642
22,6355,277,264(3,630,089)
1,647,175

Investments and Other Assets:
Investment securities (Notes 5, 6 and 7):
Unconsolidated subsidiaries and affiliates
Other
Long-term loans receivable
Net defined benefit asset (Note 11)
Deferred tax assets (Note 16)
Other investments and other assets (Note 19)
Allowance for doubtful accounts
Total Investments and Other Assets
Total Assets

23,898112,016
731
40,1092,263
29,494(486)
208,025¥ 918,859

21,918105,667
1,255
38,452
3,611
30,657(884)
200,676¥ 886,663

225,454
1,056,762
6,905
378,390
21,357278,215(4,589)1,962,494$ 8,668,487

AssetsCurrent Assets:
Cash and cash equivalents (Note 6)
Short-term investments (Notes 5, 6 and 7)
Trade receivables (Note 6)
Allowance for doubtful accounts
Inventories (Note 4)
Deferred tax assets (Note 16)
Other current assets
Total Current Assets

Property, Plant and Equipment (Note 5):Land
Buildings and structures
Machinery and equipment
Lease assets (Note 19)
Construction in progress

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

09 Fuji Electric Report Financials 2018

Thousands of
U.S. dollars(Note 3)

Millions of yen

Liabilities and Net Assets
Current Liabilities:
Short-term debt (Notes 5, 6 and 9)
Current portion of long-term debt (Notes 5, 6 and 9)
Trade payables (Notes 5 and 6)
Lease obligations (Notes 6 and 10)
Advances received
Income taxes payable (Note 16)
Other current liabilities (Notes 16 and 23)
Total Current Liabilities
Long-term Liabilities:
Long-term debt (Notes 5, 6, and 9)
Lease obligations (Notes 6 and 10)
Net defined benefit liability (Note 11)
Provision for directors’ retirement benefits
Deferred tax liabilities (Note 16)
Other long-term liabilities (Note 23)
Total Long-term Liabilities
Total Liabilities

2018

2017

2018

¥ 31,998
21,867
183,976
12,15348,5698,293
98,380405,236¥ 36,482
30,526
165,306
11,27645,092
31,051
92,671
412,404$   301,868
206,300
1,735,630
114,657
458,206
78,239928,0883,822,988

74,43523,05342,519
185
4,376
2,509
147,077
552,313

84,20820,97240,883
189
1,218
2,926
150,396
562,800

702,220
217,483
401,127
1,748
41,28523,647
1,387,510
5,210,498

47,586—45,986
195,517—47,58645,985
166,289

448,925—
433,835
1,844,509(7,284)—
281,805—(7,241)
252,619(68,723)—
2,658,546

47,665
88
1,574
(496)
48,83135,910366,546¥918,859

42,751(1,600)176(2,730)38,59732,647
323,863¥886,663

449,671839
14,837(4,686)
460,661
338,782
3,457,989$8,668,487

Contingent Liabilities (Note 18):
Net Assets (Note 24)
Shareholders’ Equity:
Capital stock (Note 12):
Authorized - 1,600,000,000 shares
Issued- 746,484,957 shares as of March 31, 2018
746,484,957 shares as of March 31, 2017
Capital surplus
Retained earnings
Treasury stock at cost (Note 12):32,215,710 shares as of March 31, 201832,158,991 shares as of March 31, 2017
Total Shareholders’ Equity
Accumulated Other Comprehensive Income (Loss):
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges (Notes 6 and 8)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total Accumulated Other Comprehensive Income
Non-controlling Interests
Total Net Assets
Total Liabilities and Net Assets

Fuji Electric Report Financials 201810

Consolidated Statements of Income
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 3)

Millions of yen

2018

2017

2018

Net Sales
Cost of Sales (Note 13)
Gross Profit¥893,451
661,824
231,627¥837,765
624,371
213,394$8,428,790
6,243,626
2,185,164

Selling, General and Administrative Expenses (Notes 13 and 14)
Operating Income

175,665
55,962

168,685
44,7091,657,220
527,944

2,503(1,621)(2,080)1,236
47
85
56,047

2,822(2,135)
(319)
1,204
15
1,587
46,296

23,622(15,299)(19,625)
11,663441
802
528,746758
56,805

17,647
63,943

7,151
535,897

14,80442,001

18,92445,019139,654396,243

4,238¥ 37,763

4,041¥ 40,97839,980$   356,263

Non-Operating Income (Expenses):
Interest and dividend income
Interest expense
Foreign exchange gains (losses)
Equity in earnings of affiliates
Other, net
Ordinary Income
Extraordinary Income, Net (Note 15)
Income Before Income Taxes
Income Taxes (Note 16)
Net Income
Net Income Attributable To Non-controlling Interests
Net Income Attributable To Owners of Parent (Note 24)
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

11 Fuji Electric Report Financials 2018

Consolidated Statements of Comprehensive Income
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 3)

Millions of yen

Net Income

2018

2017

2018

¥42,001¥45,019$396,243

5,093
1,688
1,600
2,301

12,598(464)(3,602)
18,35948,055
15,933
15,073
21,710

Other Comprehensive Income (Loss) (Note 17)
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates accounted for using
equity method
Total Other Comprehensive Income
Comprehensive Income

171

307

1,615

10,853¥52,854

27,198¥72,217

102,386$498,629

Comprehensive Income Attributable to:
Owners of parent
Non-controlling interests¥47,997
4,857¥68,397
3,820$452,810
45,819The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

Fuji Electric Report Financials 201812

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2018 and 2017
Thousands

Millions of yen

Number ofshares ofcapital stock

Capitalstock

CapitalsurplusRetainedearnings

Valuationdifference on
available-forsale securities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustments

Remeasurements ofdefinedbenefit plans

Treasury
stock

Total

Noncontrollinginterests

Total
net assets

Balance at March 31, 2016

746,484¥47,586¥46,736¥132,111¥30,254¥(1,132)¥ 3,377¥(21,321)¥(7,212)¥230,399¥30,581¥260,980

Net income attributable toowners of parent

—

—

—

40,978

—

—

—

—

—

40,978—40,978Change of scope of
consolidation

—

—

—

343

—

—

—

—

—

343

—

343

Cash dividends

—

—

—

(7,143)

—

—

—

—

—

(7,143)—(7,143)Purchase of treasury stock

—

—

—

—

—

—

—

—

(29)

(29)

—

(29)

Sales of treasury stock

—

—

0

—

—

—

—

—

0

0

—

0

Change in treasury shares of parent arising fromtransactions with
non‐controlling shareholders

—

—

(751)

—

—

—

—

—

—

(751)

—

(751)

Net changes of items other thanshareholders’ equity

—

—

—

—

12,497(468)(3,201)

18,591—

27,4192,066

29,485

Balance at March 31, 2017

746,484¥47,586¥45,985¥166,289¥42,751¥(1,600)¥   176¥ (2,730)¥(7,241)¥291,216¥32,647¥323,863

Net income attributable toowners of parent

—

—

—

37,763

—

—

—

—

—

37,763—37,763

Change of scope of
consolidation

—

—

—

36

—

—

—

—

—

36

—

36

Cash dividends

—

—

—

(8,571)

—

—

—

—

—

(8,571)—(8,571)

Purchase of treasury stock

—

—

—

—

—

—

—

—

(43)

(43)

—

(43)

Sales of treasury stock

—

—

1

—

—

—

—

—

0

1

—

1

Change in treasury shares of parent arising fromtransactions with
non‐controlling shareholders

—

—

0

—

—

—

—

—

—

0

—

0

—

Net changes of items other thanshareholders’ equity

—

—

—

—

4,914

1,688

1,398

2,234

746,484¥47,586¥45,986¥195,517¥47,665¥    88¥ 1,574¥   (496)

Balance at March 31, 2017

$448,925$433,830 $1,568,767$403,312$(15,095)$1,656$(25,758)

Net income attributable toowners of parent——

356,263

—

—

—

—

—

356,263—356,263

Change of scope of
consolidation

—

—

345

—

—

—

—

—

345

—

345

Balance at March 31, 201810,234

3,263

13,497¥(7,284) ¥330,636¥35,910¥366,546$(68,318) $2,747,319$307,995 $3,055,314

Thousands of U.S. dollars (Note 3)

Cash dividends——(80,866)

—

—

—

—

—

(80,866)—(80,866)

Purchase of treasury stock

—

—

—

—

—

—

—

(406)

(406)

—

(406)

Sales of treasury stock

—

5

—

—

—

—

—

1

6

—

6

Change in treasury shares of parent arising fromtransactions with
non‐controlling shareholders

—

0

—

—

—

—

—

—

0

—

0

—

—

46,35915,934

13,181

21,072—96,54630,787

127,333$433,835 $1,844,509$449,671$    839$14,837$ (4,686)

Net changes of items other thanshareholders’ equity
Balance at March 31, 2018—
$448,925

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

13 Fuji Electric Report Financials 2018$(68,723) $3,119,207$338,782 $3,457,989

Consolidated Statements of Cash Flows
Years ended March 31, 2018 and 2017
Thousands of
U.S. dollars(Note 3)

Millions of yen

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expense
Foreign exchange losses (gains)
Gain on sales of noncurrent assets
Gain on sales of investment securities
Loss on disposal of noncurrent assets
Loss on devaluation of investment securities
Impairment loss
Changes in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Advances received
Other, net
Cash generated from operations
Interest and dividends received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities:
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Payments for sales of shares of subsidiaries resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Net decrease in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Repayments of lease obligations
Proceeds from sales of treasury stock
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not result inchange in scope of consolidation
Other, net
Net cash 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
Increase in Cash and Cash Equivalents Resulting from Change of
Scope of Consolidation
Cash and Cash Equivalents at End of Year

2018

2017

2018

¥ 56,805
30,151(347)(2,503)
1,621
741
(209)
(1,691)366
776—¥ 63,943
29,44541(2,822)
2,135
(53)
(55)
(18,849)
568
244
1,356

$ 535,897
284,451(3,279)(23,622)
15,2996,999(1,973)(15,959)
3,459
7,323
—

(16,633)(6,933)18,6453,487
4,380
88,6562,507(1,652)(36,365)
53,146(14,107)
1,557
7,169
4,909
(7,408)68,073
2,838(2,230)(10,496)
58,185(156,921)(65,410)
175,898
32,901
41,327
836,390
23,653(15,588)(343,069)
501,386(12,279)640(2,362)
2,741—(4,634)
5,299(3,955)(14,550)(18,085)358(1,549)33,251(130)(4,371)
4,958(4,684)
9,748(115,844)
6,046(22,288)
25,860—(43,718)
49,999(37,320)(137,265)(4,570)2,060(25,559)
10,000(5,000)(12,785)0(43)(8,571)(2,364)(22,228)
11,355(16,582)
15,000(20,500)(12,879)
1(29)(7,143)(901)(43,116)
19,442(241,124)
94,340(47,170)(120,622)
6(406)(80,866)(22,303)—(2,107)—(55)(46,887)(374)(8,665)41,886(69)(56,082)(910)
10,94130,838(517)(442,336)(3,529)(81,744)395,157

108

107

1,020

¥ 33,329¥ 41,886$ 314,433

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

Fuji Electric Report Financials 201814

Notes to the Consolidated Financial Statements
Note 1. Basis of Preparing Consolidated Financial Statements
The accompanying consolidated financial statements of Fuji ElectricCo., Ltd. (the “Company”) and consolidated subsidiaries (together,
the “Companies”) are prepared on the basis of accounting principles
generally accepted in Japan, which are different in certain respects
as to application and disclosure requirements of International
Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Law of Japan.

In preparing these statements, certain reclassifications andrearrangements have been made to the consolidated financial
statements prepared domestically in Japan in order to present thesestatements in a form that is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements
include additional information which is not required underaccounting principles generally accepted in Japan.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.

Note 2. Summary of Significant Accounting Policies
a. Principles of Consolidation
The consolidated financial statements for the year ended March 31,2018 include the accounts of the Company and its 70 significant
subsidiaries and its 5 subsidiaries and affiliates are accounted for by
the equity method (68 and 5 in 2017).
Under the control or influence concept, the accompanying
consolidated financial statements include the accounts of theCompany and, with minor exceptions, those of its subsidiaries,
whether directly or indirectly controlled, and those companies overwhich the Companies have the ability to exercise significant influence
are accounted for by the equity method. All significant intercompany
balances and transactions have been eliminated in consolidation.
All material unrealized profits included in assets resulting from transactions within the Companies are eliminated. The Company does notconsolidate nor apply the equity method to subsidiaries or affiliates
whose gross assets, net sales, net income (loss) and retained
earnings are not significant to the consolidated financial statements.
Investments in unconsolidated subsidiaries and affiliates arestated at cost.
The balance sheet date of certain consolidated subsidiaries is
December 31 or January 31. In principle, the financial statementsof such subsidiaries were tentatively prepared in accordance withthe fiscal year of the Company, and those were consolidated.
In the elimination of investments in subsidiaries, the assets andliabilities of the subsidiaries, including the portion attributable tonon-controlling shareholders, are evaluated using the fair value atthe time the Company acquired control of the respective subsidiaries.
Goodwill resulting from the difference between the cost and theunderlying net assets at the respective dates of acquisition arebeing amortized over a period of 5 or 10 years.

b. Cash Equivalents
For the purpose of the consolidated statements of cash flows, theCompanies consider all short-term, highly liquid instruments witha maturity of three months or less to be cash equivalents.

c. Inventories
Raw materials are mainly stated at cost, determined by the mostrecent purchase price method. Finished goods and work in process
are mainly stated at actual cost determined by accumulated
production cost for contract items or average cost for regular
production items, except that finished goods of certain consolidated
subsidiaries are priced by the most recent purchase price method.

15 Fuji Electric Report Financials 2018

In accordance with accounting practices generally accepted in theheavy electric industry, inventories include items with a manufacturing period exceeding one year.
Inventories with lower profitability were written down and thelosses on valuation were included in cost of sales.

d. Securities
Marketable securities classified as other securities are stated at fairvalue. Unrealized gains and losses, net of taxes, are reported in a
separate component of net assets.
Nonmarketable securities classified as other securities are statedat cost determined by the moving-average method.

e. Derivatives and Hedging Activities
The Companies enter into derivative financial instruments (“derivatives”), including foreign currency forward contracts to hedge foreignexchange risk associated with certain assets and liabilities denominated in foreign currencies and interest rate and currency swap
agreements as a means of managing its interest rate and foreign
currency exposures on certain liabilities.
In addition, the Companies enter into commodity swap agreements to hedge the risk of fluctuation of commodity prices for
raw materials.
Derivative financial instruments and foreign currency transactions
are classified and accounted for as follows:a) Except as described in the following paragraphs b) and c),
all derivatives are recognized as either assets or liabilities andmeasured at fair value, and forward contracts applied forforecasted transactions are measured at fair value but theunrealized gains/losses are deferred until the underlying
transactions are completed if the forward contracts qualify forhedge accounting.
b) Trade receivables and trade payables denominated in foreign
currencies for which foreign exchange forward contracts areused to hedge the foreign currency fluctuations are accounted
for allocation treatment (“Furiate shori”) where these receivables and payables are translated at the contracted rate if theforward contracts qualify for hedge accounting.
c) The interest rate and currency swaps which qualify for hedge
accounting and meet criteria for exceptional accounting
treatment (“Tokurei shori”) and allocation treatment (“Furiate
shori”) under hedge accounting are accounted for integrated
treatment (“Ittai shori”).

f. Depreciationl. Income Taxes

1) Tangible fixed assets (excluding leased assets)
Depreciation is computed by the declining-balance method at rates
based on the estimated useful lives of the assets, while the straightline method is applied to the buildings of the Company and its
domestic consolidated subsidiaries acquired after April 1, 1998 andthe facilities attached to buildings and the other non-building structuresacquired after April 1, 2016. The range of useful lives is from 7 to50 years for buildings and from 5 to 12 years for machineryand equipment.

The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The
Company filed a consolidated tax return, which allows companies
to file tax payments on the combined basis of profits or losses ofthe parent company and its wholly owned domestic subsidiaries.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax
bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

2) Leased assets
Depreciation is computed by the straight-line method over the lease
period assuming no residual value. Finance leases other than thosethat were deemed to transfer the ownership of the leased assets tothe lessees and contracted before April 1, 2008, are accounted forby the method that is applicable to ordinary operating leases.

g. Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered
to be appropriate based on the Companies’ past credit loss experienceand an evaluation of potential losses in the receivables outstanding.

h. Retirement Benefits(1) The retirement benefit obligation for employees is attributed toeach period by the benefit formula method over the estimatedyears of service of the eligible employees.
(2) The prior service costs are amortized by the straight-line method
within the average remaining years of service of the employees
participants. The actuarial gains and losses are amortized by thestraight-line method within the average remaining years ofservice of the employee participants from the next period inwhich they arise, respectively.

m. Foreign Currency Transactions
All monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates
at the balance sheet date. The foreign exchange gains and losses
from translation are recognized in the consolidated statements
of income to the extent that they are not hedged by forward
exchange contracts.

n. Foreign Currency Financial Statements
Assets, liabilities, and revenue and expense accounts of the foreign
consolidated subsidiaries are translated into Japanese yen at thecurrent exchange rate as of the balance sheet date except forshare-holders’ equity, which is translated at the historical rate.
Differences arising from such translation are included in foreign
currency translation adjustments and non-controlling interests inconsolidated subsidiaries as a separate component of net assets.

o. Accounting for Consumption Taxes
The Japanese consumption taxes withheld and consumption taxes
paid are not included in the accompanying consolidated statements of income.

i. Provision for Directors’ Retirement Benefits

p. Amounts Per Share

For certain consolidated subsidiaries, the accrued retirement
benefits for directors were provided mainly at an amount to berequired at the year-end according to internal regulations.

Basic net income per share is computed based on the net income
attributable to common shareholders of the parent and theweighted average number of shares of common stock outstanding
during the year, and diluted net income per share is computed
based on the net income attributable to owners of parent’s common
stock and weighted average number of shares of common stock
outstanding during each year after giving effect to the dilutive potentialof shares of common stock to be issued upon the exercise of
warrants and stock subscription rights.
Net assets per share are computed based on the net assets
excluding share subscription rights and non-controlling interests
and the number of shares of common stock outstanding at theyear end.

j. Research and Development Costs
Research and development costs are charged to income as incurred.

k. Recognition for Revenue and Costs
For long-term construction contracts whose outcome can be
estimated reliably, the percentage-of-completion method isadopted. The stage of completion of a contract is determined by
the percentage of the cost incurred to date to the estimated total
cost. When the outcome of the construction contracts cannot be
estimated reliably, the completed-contract method is adopted.

Fuji Electric Report Financials 201816

q. Accounting Standards Issued but not yet Effective- “Accounting Standard for Revenue Recognition” (AccountingStandard Board of Japan (“ASBJ”) statement No. 29 ofMarch 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30 of March 30, 2018)(1) Overview
	International Accounting Standards Board (“IASB”) and Financial
Accounting Standards Board (“FASB”) worked together toward
development of a comprehensive accounting standard forrevenue recognition and “Revenue from Contracts with
Customers” was issued as IFRS 15 by the IASB and as ASC
606 by the FASB in May, 2014. IFRS 15 became effective forannual reporting periods beginning on or after January 1, 2018
and ASC 606 became effective for the periods beginning on orafter December 15, 2017. In light of these circumstances, the
ASBJ developed and issued a comprehensive accounting
standard for revenue recognition together with an implementation
guidance. The ASBJ’s basic policy for developing accounting

standard for revenue recognition is to build the standard on thecore principle of IFRS 15 in terms of international comparability
between financial statements that is one of the benefits of
convergence toward IFRS 15. It also stated that alternative
accounting treatment may be additionally adopted locally, tomake consideration to the current Japanese practices if necessary,
provided such alternative treatments would not impair
international comparability.
(2) Scheduled date of adoption
	The Companies expect to adopt the accounting standard andimplementation guidance from the beginning of the fiscal year
ending March 31, 2022.
(3)	Impact of the adoption of accounting standard andimplementation guidance	The Companies are currently evaluating the effect of the
adoption of this accounting standard and implementation
guidance on the consolidated financial statements.

Note 3. U.S. Dollar Amounts
The U.S. dollar amounts included in the accompanying consolidated
financial statements and notes thereto represent the arithmetic resultsof translating yen into U.S. dollars at ¥106=U.S.$1, the approximate

exchange rate as of March 31, 2018. The U.S. dollar amounts arepresented solely for the convenience of the readers outside Japan.

Note 4. Inventories
Inventories as of March 31, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Merchandise and finished goods
Work in process
Raw materials
Inventories

2018

2017

2018

¥ 57,821
50,372
41,564¥149,757¥ 56,873
48,39537,144¥142,412$   545,484
475,210392,117$1,412,811

Losses (gains) on valuation of inventories with lower profitability were ¥210 million ($1,984 thousand) and ¥586 million for the years
ended March 31, 2018 and 2017, respectively. These were included in cost of sales.

Note 5. Pledged Assets and Financial Assets Accepted as Collateral
The amounts of assets pledged as collateral for trade payables, short-term debt and long-term debt as of March 31, 2018 and 2017 wereas follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Investment securities
Property, plant and equipment
Intangible assets
Total

2018

2017

2018

¥   22
1,812
445¥2,279¥   18
1,956
435¥2,409$   215
17,103
4,184$21,503

Collateralized liabilities as of March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Trade payables
Short-term debt
Long-term debt
Total

17 Fuji Electric Report Financials 2018

¥ 78
412
140
¥630

2017

¥ 51
148
177
¥376

2018

$   743
3,893
1,311$5,947

Note 6. Financial Instruments
1. Status of financial instruments(1) Policy regarding financial instruments
The Companies limit the scope of their cash and fund management
activities to short-term deposits. When raising funds, the Companies
have a policy of relying principally on bank borrowings, bonds
payable and commercial paper. The Companies mainly raise theoperating funds through short-term loans payable and commercial
paper, and the funds relating to capital investments through longterm loans payable and bonds payable. The Companies make useof derivatives to reduce risk, as explained below, and have a policyof not engaging in derivative transactions for speculative purposes.
(2) Details of financial instruments and associated risk
In the course of its business activities, trade receivables are
exposed to customer credit risk.
In addition, trade receivables denominated in foreign currencies
arising from international business are exposed to exchange risk.
The Companies hedge the exchange risk, by using foreign exchange
forward contracts within the range prescribed relating to the net
amount of the trade receivables denominated in foreign currencies,
offset by the amount of the trade payables denominated in thesame currencies.
Short-term investments and investment securities are comprised
primarily of stocks of companies with which the Companies havebusiness relation and are exposed to market price risk.
Trade payables are mostly payable within one year. Some trade
payables are denominated in foreign currencies and exposed to
exchange risk. The Companies hedge the exchange risk of the
trade payables denominated in foreign currencies in principle, except
for the amount within that of trade receivables denominated in thesame currencies, by using foreign exchange forward contracts.
Short-term loans payable and commercial paper are primarilyraised for the purpose of maintaining operating funds. Bonds
payable, long-term loans payable and lease obligations on financelease transactions are primarily raised for the purpose of preparing
capital investment. The maturities of these bonds payable, long-termloans payable and lease obligations on finance lease transactions
are up to13 years at the longest after the balance sheet date. Someare exposed to interest rate fluctuation risk and the Companies
hedge such risk by interest rate and currency swap transactions.
Regarding derivatives, the Companies employ foreign exchange
forward contracts to reduce the risk of foreign currency exchange
movements that arise from the previously mentioned receivables
and payables denominated in foreign currencies. In addition, theCompanies use interest rate and currency swap transactions to
reduce the interest rate fluctuation risk of loans, and use commodity
swap transactions to reduce the risk of fluctuation of commodity
prices for raw materials. As hedging instruments under hedge
accounting, the Companies enter into these derivative transactionsin accordance with Companies’ policies to reduce the corresponding
risk to each hedged item. The Companies compare the market
change of hedged items and hedging instruments or the cash flowchanges. Assessment of effectiveness for hedging activities depends
on the ratio of the amount of change.

(3) Systems for management of financial instruments riska) Credit risk management (the risk that transaction partners
may default on their obligations to the Companies)
The credit risk in relation to trade receivables from customers,
pursuant to criteria for managing credit exposure, is managed bycontrolling due dates and balances of each customer. In addition,
the Companies manage to identify doubtful receivables earlier andmitigate their risk caused by aggravation of the financing position, etc.
Because the counterparties to derivative transactions are limited
to authentic financial institutions, the Companies do not anticipate
any losses arising from credit risk.
b) Market risk management (the risks arising from fluctuations
in exchange rates, interest rates and other indicators)
The Companies, in principle, employ foreign exchange forward
contracts to reduce the risk of foreign currency exchange
movements that arise from the previously mentioned receivables
and payables denominated in foreign currencies. In addition, theCompanies use interest rate and currency swap transactions to
reduce the interest rate and exchange fluctuation risk of loans, anduse commodity swap transactions to reduce the risk of fluctuationof commodity prices for raw materials.
Regarding investment securities, the Companies periodicallyreview the market value of such financial instruments and the financial
position of the issuer (the company having business transactions
with the Companies). In addition, other than debt securities to beheld until maturity, the Companies review the status of theseinvestments on a continuing basis.
Derivative transactions have been entered into in accordancewith the Companies’ policies. The execution of derivatives, which
is based on the application of each section, is mainly controlled by
the Finance Department of each company, or by the Material
Section regarding commodity swap transactions. In addition, theFinance Department periodically reports to the management andeach section, and strictly performs risk management relating toderivative transactions.
c) Liquidity risk management (the risk that the Companies
may not be able to meet its payment obligations on thescheduled date)
The Companies reduce the liquidity risk by having each company
review and revise cash management plans monthly or timely.
(4) Supplementary explanation of the estimated fair value offinancial instruments and related matters
The estimated fair value of financial instruments is their price basedon their market price and other indicators. When there is no market
price available, it includes prices which are reasonably computed.
Since variable factors are taken into account in computing theprice, this price may fluctuate depending on different assumptions
adopted. In addition, the contract (notional) amount of derivatives in“Note 8. Derivatives” is not an indicator of the actual market risk
involved in derivative transactions.

Fuji Electric Report Financials 201818

2. Estimated fair value and other matters related to financial instruments
Carrying amounts on the consolidated balance sheets as of March 31, 2018 and 2017, estimated fair value and the variance between them
are shown in the following table. Financial instruments whose estimated fair value is deemed to be extremely difficult to obtain are notincluded (Please refer to Note 2).
Millions of yen

2018

Cash and cash equivalents
Trade receivables
Investment securities
Trade payables
Short-term debt
Current portion of long-term debt
Lease obligations (Current Liabilities)
Long-term debt
Lease obligations (Long-term Liabilities)
Derivatives
Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting is applied

Carrying amounts

Fair value

Variance¥   33,329
287,084
120,305(183,976)(31,998)(21,867)(12,153)(74,435)(23,053)¥   33,329
286,992
132,928(183,976)(31,998)(21,895)(12,153)(74,602)(23,355)¥     —
(92)
12,623
—
—
28
—
167
302

16
128

16
128

—
—

Millions of yen

2017

Cash and cash equivalents
Trade receivables
Investment securities
Trade payables
Short-term debt
Current portion of long-term debt
Lease obligations (Current Liabilities)
Long-term debt
Lease obligations (Long-term Liabilities)
Derivatives
Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting is applied

Carrying amounts

Fair value¥   41,886
269,676
113,401(165,306)(36,482)(30,526)(11,276)(84,208)(20,972)¥   41,886
269,642
123,351(165,306)(36,482)(30,535)(11,276)(84,548)(21,235)

Variance¥    —
(34)
9,950
—
—
9
—
340
263

31
(2,314)31(2,314)——

Thousands of U.S. dollars (Note 3)

2018

Cash and cash equivalents
Trade receivables
Investment securities
Trade payables
Short-term debt
Current portion of long-term debt
Lease obligations (Current Liabilities)
Long-term debt
Lease obligations (Long-term Liabilities)
Derivatives
Derivative transactions to which hedge accounting is not applied
Derivative transactions to which hedge accounting is applied

Carrying amounts

Fair value

Variance$   314,433
2,708,341
1,134,957(1,735,630)(301,868)(206,300)(114,657)(702,220)(217,483)$   314,433
2,707,472
1,254,040(1,735,630)(301,868)(206,564)(114,657)(703,796)(220,334)$     —
(869)
119,083
—
—
264
—
1,576
2,851

151
1,209

151
1,209

—
—

(*1) Figures shown in parentheses are liability items.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, and a net liability position is shown in parentheses.

19 Fuji Electric Report Financials 2018

Notes: 1. Methods for computing the estimated fair value of financial instruments, and information on securities and derivatives		 (1) Cash and cash equivalents
			 Since these items are settled in a short period of time, estimated fair values are virtually the same as the carrying amounts.
		 (2) Trade receivables
			Fair values of trade receivables, classified by each maturity, are based on the present value discounted by the interest rate determined taking into account the term until
maturity and the credit risk.
		 (3) Investment securities
			Stocks are valued at the exchange trading price. For information on securities classified by the purpose of holding, please refer to “Note 7. Securities.”		 (4)	Trade payables, (5) Short-term debt, (6) Current portion of long-term debt (except bonds) and (7) Lease obligations (Current Liabilities)
Since these items are settled in a short period of time, estimated fair values are virtually the same as the carrying amounts.
		 (6) Current portion of long-term debt (bonds) and (8) Long-term debt (bonds)
			 Fair values of bonds issued by the Company are based on each market price.
		 (8) Long-term debt (except bonds) and (9) Lease obligations (Long-term Liabilities)
			Fair values of these items are based on the present value of the total of principal and interest discounted by the interest rate applied if similar new borrowings and new leasetransactions were entered into.
		 (10) Derivatives
			 Please refer to “Note 8. Derivatives.”
2. Items for which obtaining an estimated fair value is deemed to be extremely difficult.
Thousands of
U.S. dollars(Note 3)

Millions of yen

Unlisted stocks (including stocks of unconsolidated subsidiaries and affiliates)

2018

2017

2018

Carrying amounts

Carrying amounts

Carrying amounts¥15,609¥14,184$147,259	Because the items in the preceding table do not have market price and obtaining the estimated fair values of these items is deemed to be extremely difficult, fair value has notbeen disclosed in (3) Investment securities.

3. Redemption schedule for monetary assets and securities with maturity dates as of March 31, 2018 and 2017:
Millions of yen

2018
Within 1 year

Between 1 and5 years

Between 5 and10 years

Cash and cash equivalents¥ 33,329¥     —¥—¥—

Trade receivables

260,206

26,878——Over 10 years

Investment securities
	Debt securities with maturity date classified as other securities(Public bonds)
		Total

—

—

—

—

¥293,535¥26,878¥—¥—

Millions of yen

2017
Within 1 year

Between 1 and5 years

Between 5 and10 years

Cash and cash equivalents¥ 41,886

¥   —

¥—

¥—

Trade receivables

261,221

8,458

6

—

Over 10 years

Investment securities
	Debt securities with maturity date classified as other securities(Public bonds)
		Total

—

—

—

—

¥303,107¥8,458¥  6¥—

Thousands of U.S. dollars (Note 3)

2018
Within 1 year

Between 1 and5 years

Between 5 and10 years

Over 10 years

Cash and cash equivalents$   314,433$     —$—$—

Trade receivables

2,454,765

253,575——

Investment securities
	Debt securities with maturity date classified as other securities(Public bonds)
		Total

—

—

—

—

$2,769,198$253,575$—$—

4. Repayment schedule for long-term debt and lease obligations:
		 Please refer to “Note 9. Short-term Debt and Long-term Debt” and “Note 10. Lease Obligations.”

Fuji Electric Report Financials 201820

Note 7. Securities
1. Other securities as of March 31, 2018 and 2017 were as follows:
Millions of yen

2018Marketable securities classified as other securities
Equity securities
Debt securities
Others
Total

Cost

Carrying amounts¥39,284——¥39,284¥107,990——¥107,990

Unrealized gains

Unrealized losses¥69,243——¥69,243¥(537)——¥(537)

Unrealized gains

Unrealized losses¥61,941——¥61,941¥(506)——¥(506)

Millions of yen

2017Marketable securities classified as other securities
Equity securities
Debt securities
Others
Total

Cost

Carrying amounts¥40,173——¥40,173¥101,608——¥101,608

Thousands of U.S. dollars (Note 3)

2018
Cost

Marketable securities classified as other securities
Equity securities
Debt securities
OthersTotal$370,606——$370,606

Carrying amounts

Unrealized gains

Unrealized losses$653,237——$653,237$(5,062)——$(5,062)$1,018,781——$1,018,781

Note: Note: The following is not included in the preceding tables because it does not have market price and obtaining an estimated fair value is deemed to be extremely difficult:
Unlisted stocks (Values in the consolidated balance sheets as of March 31, 2018 and 2017 were ¥4,026 million ($37,981 thousand) and ¥4,058 million, respectively.)

2. Sales of other securities for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Proceed from sales
Gain on sales
Loss on sales¥2,633
1,691
(1)

2017

¥33,240
18,849—2018$24,843
15,959(18)

3. Impairment of other securities for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Impairment losses

21 Fuji Electric Report Financials 2018

¥776

2017

¥244

2018

$7,323

Note 8. Derivatives
1. Derivative transactions to which hedge accounting is not applied
Millions of yen

2018
Contract amountForeign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Won
Baht
Payables:U.S. Dollar
Won
Yen
New Taiwan Dollar
Total

Contract amountover 1 year

Fair value

Unrealized
gain/loss¥2,234
1,046
507
109

¥  —
—
197
—

¥ 14
15
(4)
(10)

¥ 14
15
(4)
(10)

506
198
12
7
¥4,619

—
—
—
—
¥197

(4)
5
(0)
(0)
¥ 16

(4)
5
(0)
(0)
¥ 16

Millions of yen

2017
Contract amountForeign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Won
Payables:U.S. Dollar
Won
Yen
New Taiwan Dollar
Total

Contract amountover 1 year

Fair value

Unrealized
gain/loss¥1,833
1,193
339

¥ —
—
—

¥30
0
(9)

¥30
0
(9)

440
301
32
17
¥4,155

—
102
—
—
¥102

3
7
(0)
0
¥31

3
7
(0)
0
¥31

Thousands of U.S. dollars (Note 3)

2018

Foreign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Won
Baht
Payables:U.S. Dollar
Won
Yen
New Taiwan Dollar
Total

Contract amountContract amountover 1 year

$21,047
9,872
4,790
1,030

$   —
—
1,866
—

$ 150
147
(46)
(102)

$ 150
147
(46)
(102)

4,781
1,869
123
66
$43,578————$1,866

(46)
48
(0)
(0)
$ 151

(46)
48
(0)
(0)
$ 151

Fair value

Unrealized
gain/loss

Note: The fair value is estimated based on forward exchange rates.

Fuji Electric Report Financials 201822

2. Derivative transactions to which hedge accounting is applied(1) Currency-related contracts
Millions of yen

2018
Hedge accounting
methodDeferral hedge
methodAllocation method

Type of derivative

Foreign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Payables:U.S. Dollar
Euro
Pound Sterling
Singapore Dollar
Swiss Franc
Australian Dollar
Foreign currency forward contracts:
Receivables:
U.S. Dollar
Yuan Renminbi
Baht
Payables:U.S. Dollar
Euro
Singapore Dollar
Swiss Franc
Total

Principal items hedged

Accounts receivable–trade
Accounts payable–trade

Accounts receivable–trade

Accounts payable–trade

Contract amountContract amountover 1 year

Fair value¥ 7,417
1,448¥2,058
—

¥ 354
(18)

8,596
11,175
395
99
26
7

2
6,213
—
—
—
—

(107)
(89)
(8)
(3)
(1)
(0)

¥ 1,388299
148¥    ———(Note2)

589
941
66
0
¥32,594————¥8,273¥ 128

Millions of yen

2017
Hedge accounting
methodDeferral hedge
methodAllocation method

Type of derivative

Foreign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Payables:U.S. Dollar
Euro
Pound Sterling
Singapore Dollar
Swiss Franc
Foreign currency forward contracts:
Receivables:
U.S. Dollar
Yuan Renminbi
Baht
Payables:U.S. Dollar
Euro
Total

23 Fuji Electric Report Financials 2018

Principal items hedged

Accounts receivable–trade
Accounts payable–trade

Accounts receivable–trade

Accounts payable–trade

Contract amountContract amountover 1 year

Fair value¥ 5,847360¥   990—¥   (26)
1

2,750
20,9746853
4457
13,476———(39)(2,259)6
3(0)¥ 2,5741800¥    114——(Note2)

2,288
283¥35,3810
2¥15,039¥(2,314)

Thousands of U.S. dollars (Note 3)

2018
Hedge accounting
methodDeferral hedge
methodAllocation method

Type of derivative

Foreign currency forward contracts:
Receivables:
U.S. Dollar
Euro
Payables:U.S. Dollar
Euro
Pound Sterling
Singapore Dollar
Swiss Franc
Australian Dollar
Foreign currency forward contracts:
Receivables:
U.S. Dollar
Yuan Renminbi
Baht
Payables:U.S. Dollar
Euro
Singapore Dollar
Swiss Franc
Total

Principal items hedged

Accounts receivable–trade
Accounts payable–trade

Accounts receivable–trade

Accounts payable–trade

Contract amountContract amountover 1 year

Fair value$ 69,981
13,661$19,423—$ 3,343(174)

81,100105,377
3,736
938
246
69

25
58,602————(1,017)
(820)
(77)
(30)
(14)
(1)

$ 13,095
2,828
1,397

$      ———

(Note2)

5,560
8,880
628
0
$307,494————$78,051$ 1,209

Notes: 1. The fair value is estimated based on forward exchange rates.
2. S
 ince amounts in foreign currency forward contracts treated by the allocation method are handled together with accounts receivable-trade and accounts payable-trade that are
subject to hedging, the estimated fair value of such contracts is included in the fair value of accounts receivable-trade or accounts payable-trade.

(2) Interest-rate-related contracts
Millions of yen

2018
Hedge accounting method

Type of derivative

Principal items hedgedExceptional accounting Interest rate and currency swap Long-term loans payable
treatment and allocation contracts (Floating rate receipts /treatment
Fixed rate payments)

Contract amount¥1,835Contract amountover 1 year

Fair value¥1,835(Note2)Millions of yen

2017
Hedge accounting method

Exceptional accounting
treatment

Type of derivativeInterest rate swap contracts(Floating rate receipts /Fixed rate payments)

Principal items hedged

Contract amountContract amountover 1 year

Fair value

Long-term loans payable¥11,835¥1,835(Note 2)Thousands of U.S. dollars (Note 3)

2018
Hedge accounting method

Type of derivative

Principal items hedgedExceptional accounting Interest rate and currency swap Long-term loans payable
treatment and allocation contracts (Floating rate receipts /treatment
Fixed rate payments)

Contract amount$17,314

Contract amountover 1 year

$17,314

Fair value(Note2)

Notes: 1. The fair value is principally based on the quotes obtained from the correspondent financial institutions.
2. S ince amounts in interest rate swaps which qualify for hedge accounting and meet specific matching criteria are handled together with long-term loans payable that are subject
to hedging, the estimated fair value of such interest rate swaps is included in the fair value of the long-term loans payable.

Fuji Electric Report Financials 201824

Note 9. Short-term Debt and Long-term Debt
Short-term debt as of March 31, 2018 and 2017 consisted of the following:
Millions of yen

Loans, principally from banks
Commercial paper
Short-term debt

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥31,998—¥31,998¥36,482—¥36,482$301,868—$301,868

Note: The weighted average interest rates on short-term debt as of March 31, 2018 and 2017 were 1.48% and 1.39%, respectively.

Long-term debt as of March 31, 2018 and 2017 consisted of the following:
Millions of yen

Loans, principally from banks and insurance companies
Bonds issued by the Company:
1.00% Yen unsecured straight bonds due June 13, 2017
0.90% Yen unsecured straight bonds due June 6, 2018
0.38% Yen unsecured straight bonds due September 4, 2020
0.28% Yen unsecured straight bonds due August 31, 2023
0.40% Yen unsecured straight bonds due May 5, 2027
Less: Portion due within one year
Long-term debt

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥36,302¥ 59,734$342,483—
20,00015,00015,00010,00096,302
21,867¥74,435

5,000
20,00015,00015,000—114,734
30,526¥ 84,208—
188,679
141,509
141,509
94,340908,520
206,300$702,220

Note: The weighted average interest rates on loans, principally from banks and insurance companies, as of March 31, 2018 and 2017 were 0.45% and 0.54%, respectively.

As of March 31, 2018, the aggregate annual maturities of long-term debt were as follows:
Years ending March 31,

2020
2021
2022
2023
2024 thereafter
Total

Millions of yen

Thousands of
U.S. dollars (Note 3)¥26,407
16,5903,820
1427,604¥74,435$249,129
156,51036,045
136
260,400$702,220

Note 10. Lease Obligations
Lease obligations as of March 31, 2018 and 2017 consisted of the following:
Millions of yen

Short-termLong-term
Total

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥12,153
23,053¥35,206¥11,276
20,972¥32,248$114,657
217,483$332,140

Millions of yen

Thousands of
U.S. dollars (Note 3)¥ 7,921
6,285
4,940
2,578
1,329
¥23,053$ 74,727
59,29446,60424,323
12,534$217,482

Note: The weighted average interest rates on lease obligations as of March 31, 2018 and 2017 were 1.98% and 2.19%, respectively.

As of March 31, 2018, the aggregate annual maturities of lease obligations were as follows:
Years ending March 31,

2020
2021
2022
2023
2024 thereafterTotal

25 Fuji Electric Report Financials 2018

Note 11. Retirement Benefits
1. Outline of retirement benefits for employees
The Company and most of its consolidated subsidiaries have either
funded or unfunded defined benefit plans and defined contribution
pension plans.
Defined benefit corporate pension plans are all funded and coversubstantially all employees who are entitled to lump-sum or annuity
payments determined by reference to their basic rates of pay andlength of service. In addition, retirement benefit trust has been
established in certain pension plans.
Lump-sum payment plans are either unfunded or funded as aresult of establishing retirement benefit trust. They coversubstantially all employees who are entitled to lump-sum payments
determined by reference to either points obtained with interest
credits or their basic rates of pay and length of service.
Certain domestic consolidated subsidiaries adopted a simplified
method in the calculation of net defined benefit liability and retirement benefit expense. Certain domestic consolidated subsidiaries
have multi-employer corporate pension plans accounted for by thesame methods used for defined contribution pension plans because
they cannot reasonably calculate their portion of pension assets
corresponding to their contributions.

2. Information on defined benefit pension plans(1) The changes in the retirement benefit obligation except for plans accounted for by a simplified method during the years ended
March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Retirement benefit obligation at the beginning of the year
Service cost
Interest cost
Actuarial loss
Retirement benefits paid
Prior service cost
Difference arising from the change from simplified method to principle method
OthersRetirement benefit obligation at the end of the year

2018

2017

2018

¥193,369
3,183
2,566
735
(13,767)
(294)
1,533
19
¥187,344¥198,464
3,273
2,659
2,458
(13,467)——(18)¥193,369$1,824,240
30,02824,216
6,936(129,881)(2,778)
14,469173$1,767,403(2) The changes in plan assets at fair value except for plans accounted for by a simplified method during the years ended
March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Plan assets at fair value at the beginning of the year
Expected return on plan assets
Actuarial gainContributions by the Companies
Retirement benefits paid
Difference arising from the change from simplified method to principle method
OthersPlan assets at fair value at the end of the year

2018

2017

2018

¥193,368
2,187
1,930
1,613
(13,015)645(2)¥186,726¥167,822
3,489
24,725
6,485(9,151)—(2)¥193,368$1,824,236
20,64018,213
15,225(122,789)
6,086
(36)
$1,761,575(3) The changes in net defined benefit liability calculated by a simplified method during the years ended March 31, 2018 and2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Retirement benefit obligation at the beginning of the year
Retirement benefit expenses
Retirement benefits paid
Contributions
Difference arising from the change from simplified method to principle method
OthersNet defined benefit liability at the end of the year

2018

2017

2018

¥2,431
362
(98)
(157)
(724)
(22)
¥1,792¥2,463
237
(152)
(242)
—
125
¥2,431$22,937
3,418(930)(1,484)(6,838)(193)$16,910

Fuji Electric Report Financials 201826

(4) The reconciliation of retirement benefit obligation and plan assets at fair value with net defined benefit liability and net defined
benefit asset recognized in the consolidated balance sheet were outlined as follows:

Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

2017

2018

Unfunded retirement benefit obligation
Net amount of liabilities and assets recognized in the consolidated balance sheet¥ 186,955(190,198)(3,243)
5,653¥   2,410¥ 193,441(197,393)(3,952)
6,383¥   2,431$ 1,763,730(1,794,327)(30,597)
53,335$    22,738

Net defined benefit liability
Net defined benefit asset
Net amount of liabilities and assets recognized in the consolidated balance sheet

42,519(40,109)¥   2,410

40,883(38,452)¥   2,431

401,127(378,390)$    22,738

Funded retirement benefit obligation
Plan assets at fair value

Note: Pension plans accounted for by a simplified method are included.

(5) The components of retirement benefit expenses for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Amortization of prior service cost
Retirement benefit expenses calculated by simplified method
Difference arising from the change from simplified method to principle method
OthersRetirement benefit expenses

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥ 3,183
2,566(2,187)
2,223
(422)
362
163
173
¥ 6,061¥ 3,273
2,659(3,489)
4,731
(563)
237
—
151
¥ 6,999$ 30,028
24,216(20,640)
20,978(3,984)
3,418
1,544
1,624
$ 57,184(6) The components of remeasurements of defined benefit plans included in other comprehensive income (before tax effect) for theyears ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Prior service cost
Actuarial gain and loss
Total

2018

2017

¥   127(3,421)¥(3,294)¥    563(26,999)¥(26,436)2018$   1,206(32,283)$(31,077)(7) The components of remeasurements of defined benefit plans included in accumulated other comprehensive income(before tax effect) as of March 31, 2018 and 2017 were as follows:

Thousands of
U.S. dollars (Note 3)

Millions of yen

Unrecognized prior service cost
Unrecognized actuarial gain and loss
Total

2018

2017

2018

¥(6,060)
5,941¥   (119)¥(6,188)
9,363¥ 3,175$(57,176)
56,053$ (1,123)(8) The breakdown of plan assets by major category as of March 31, 2018 and 2017 were as follows:
Debt securities
Deposit
Equity securities
General accounts at life insurance companies
Others
Total

2018

2017

36%
35
15
13
1
100%

35%
37
16
12
0
100%

Note: Retirement benefit trust established for the corporate pension plans is included and equivalent to 22% of total amount of plan assets as of March 31, 2018 and 2017, respectively.

The long-term expected rates of return on plan assets has been determined as a result of consideration of both the portfolio allocation
at present and in the future, and long-term rates of return from multiple plan assets at present and in the future.
(9) The assumptions used in accounting for the defined benefit plans as of March 31, 2018 and 2017 were as follows:
Discount rates
Long-term expected rates of return on plan assets
Expected rates of salary increase

27 Fuji Electric Report Financials 2018

2018

2017

0.27% – 1.40%
mainly 2.0%
2.5% – 8.6%

0.27% – 1.40%
mainly 2.5%
2.5% – 8.6%

3. Information on defined contribution pension plans
Contributions of defined contribution pension plans for the years ended March 31, 2018 and 2017 were ¥4,584 million ($43,248 thousand)and ¥4,565 million, respectively.

4. Information on multi-employer pension plans
Contributions to multi-employer corporate pension plans for the year ended March 31, 2018 and contributions to multi-employer welfare
pension plans for the year ended March 31, 2017 that are accounted for by the same methods used for defined contributions plans were
¥14 million ($138 thousand) and ¥35 million, respectively.

Note 12. Shareholders’ Equity
1. Shares issued and outstanding / Treasury stock
The Companies Act of Japan provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus(other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve and the legal reserve equals 25% of the capital stock account. Such distributions can bemade at any time by resolution of the shareholders or by the Board of Directors if certain conditions are met.
Movements in shares outstanding and treasury stock during the years ended March 31, 2018 and 2017 were as follows:
Thousands of shares
March 31, 2017

Shares outstanding:Common stock
Total
Treasury stock:
Common stock
Total

Increasein the year

Decreasein the year

March 31, 2018

746,484
746,484————

746,484
746,484

32,15832,15857
57

0
032,21532,215

Thousands of shares
March 31, 2016

Shares outstanding:Common stock
Total
Treasury stock:
Common stock
Total

Increasein the year

Decreasein the year

March 31, 2017

746,484
746,484————

746,484
746,484

32,10932,10951
51

2
232,15832,158The increases of treasury stock were due to purchase of shares of less than one voting unit and the decreases of treasury stock were
due to sales of shares at the request of shareholders who own less than one voting unit for the years ended March 31, 2018 and 2017.

2. Dividends(1) Dividends paid
For the year ended March 31, 2018
Total dividends
Total dividends (thousands of U.S.
Type of shares (millions of yen) dollars (Note 3))

Resolution

Meeting of the Board of
Directors on May 25, 2017
Meeting of the Board of
Directors on October 26, 2017

Commonstock
Commonstock

Dividends
per share(yen)

Dividends per share(U.S. dollars (Note 3))

Cut-off date

Effective date

¥4,285$40,432

¥6.0

$0.06

March 31, 2017

June 7, 2017

4,285

40,4326.0

0.06

September 30,
2017

December 5,
2017

Dividends per share (yen)Cut-off date

Effective date

¥3,571¥5.0

March 31, 2016

June 8, 2016

3,571

5.0

September 30,
2016

December 5,
2016

For the year ended March 31, 2017
Total dividends
Type of shares (millions of yen)

Resolution

Meeting of the Board of
Directors on May 26, 2016
Meeting of the Board of
Directors on October 27, 2016

Commonstock
Commonstock(2) Dividends with the cut-off date in the year ended March 31, 2018 and effective date in the year ending March 31, 2019
Resolution

Meeting of the Board of
Directors on May 24, 2018

Total dividends
Type of shares (millions of yen)

Commonstock¥5,714

Total dividends(thousands of U.S.
dollars (Note 3))$53,907

Source ofdividends

Retainedearnings

Dividends
per share(yen)

Dividends
per share (U.S.
dollars (Note 3))

¥8.0

$0.08

Cut-off date

Effective date

March 31,2018

June 6,2018

Dividends with the cut-off date in the year ended March 31, 2017 and effective date in the year ended March 31, 2018
Resolution

Total dividends
Type of shares (millions of yen)

Meeting of the Board of
CommonDirectors on May 25, 2017stock

¥4,285

Source of dividends

Dividends per share (yen)Cut-off date

Effective date

Retained earnings¥6.0

March 31,2017

June 7,2017

Fuji Electric Report Financials 201828

Note 13. Research and Development Costs
Research and development costs charged to income were ¥35,620 million ($336,045 thousand) and ¥34,910 million for the years ended
March 31, 2018 and 2017, respectively.
Millions of yen

Research and development costs

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥35,620¥34,910$336,045

Note 14. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

Salaries and wages
Retirement benefit expenses
Research and development costs

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥77,637
4,607
30,796¥74,466
4,837
30,319$732,433
43,465
290,534

Note 15. Extraordinary Income, Net
Extraordinary income, net, for the years ended March 31, 2018 and 2017 were as follows:
Millions of yen

Thousands of
U.S. dollars (Note 3)

2018

2017

Extraordinary income
Gain on sales of noncurrent assets
Gain on sales of investment securities
Gain on insurance adjustment¥   2091,691—¥    55
18,849911$ 1,973
15,960—Extraordinary loss
Loss on disposal of noncurrent assets
Loss on devaluation of investment securities
Impairment loss
Extraordinary income, net

(366)
(776)
—
¥   758

(568)
(244)
(1,356)¥17,647(3,459)(7,323)—$ 7,151

29 Fuji Electric Report Financials 20182018

Note 16. Income Taxes
1. The components of income taxes for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Current
DeferredIncome taxes

2018

2017

2018

¥13,738
1,066¥14,804¥ 33,157(14,233)¥ 18,924$129,610
10,044$139,654

The Company and its domestic consolidated subsidiaries are subject to corporate income tax, prefectural and municipal inhabitants’taxes and enterprise tax, based on income.

2. The significant components of deferred tax assets and liabilities as of March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Deferred tax assets
Net defined benefit liability
The investment deduction of the foreign consolidated subsidiaries
Inventories
Accrued employees’ bonuses
Investment securities
Tangible fixed assets
Other
Gross deferred tax assets
Less: Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Unrealized gain on other securities
Investment securities
Gain on securities contribution to employee retirement benefit trust
Other
Gross deferred tax liabilities
Net deferred tax assets (liabilities)

2018

2017

2018

¥ 21,688
14,216
7,487
6,584
6,353
2,112
6,547
64,987(21,822)
43,165¥ 23,604
14,338
6,597
6,379
6,459
2,403
8,190
67,970(23,012)44,958$ 204,608
134,12270,64062,11959,94019,92561,736
613,090(205,866)
407,224(21,095)(2,062)(72)(4,781)(28,010)¥ 15,155(18,927)(2,062)(26)(3,629)(24,644)¥ 20,314(199,017)(19,461)(681)(45,088)(264,247)$ 142,977

3. The reconciliation between the statutory income tax rate and the effective income tax rate for the years ended
March 31, 2018 and 2017 were as follows:
Statutory income tax rate
Tax credits
Tax rate difference of overseas consolidated subsidiaries
Valuation allowance
Permanent difference resulting from non-taxable income, including dividends received
Permanent difference resulting from expenses not deductible for income tax purposes
Other
Effective income tax rate

2018

2017

30.9 %
(3.2)
(2.1)
(1.9)
(0.3)
1.4
1.3
26.1 %

—
—
—
—
—
—
—
—

Reconciliation of the difference between the statutory income tax rate and the effective income tax rate for the year ended March 31,2017 was not disclosed because it was not material.

Fuji Electric Report Financials 201830

Note 17. Consolidated Statements of Comprehensive Income
Amounts reclassified to profit (loss) in the current period that were recognized in other comprehensive income in the current or previous
periods and the tax effects for each component of other comprehensive income were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Valuation difference on available-for-sale securities:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effect
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges:
Amount arising during the year
Asset acquisition cost adjustments
Before tax effectTax effect
Deferred gains or losses on hedges
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effectForeign currency translation adjustments
Remeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustments
Before tax effectTax effectRemeasurements of defined benefit plans
Share of other comprehensive income of associates accounted for using equity method:Amount arising during the year
Reclassification adjustments
Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income

2018

2017

¥ 8,952(1,690)7,262(2,169)5,093¥ 36,669(18,689)
17,980(5,382)
12,598$ 84,455(15,940)
68,515(20,460)
48,055

2,312
—
2,312
(624)
1,688

(561)
19
(542)
78
(464)

21,821—
21,821(5,888)15,933

1,600
—
1,600
—
1,600

(3,238)(364)(3,602)—(3,602)

15,073—
15,073—
15,073

1,492
1,802
3,294
(993)
2,301

22,267
4,169
26,436(8,077)
18,35914,082
16,99531,077(9,367)
21,710

31
140

159
148

297
1,318

171

307

1,615

¥10,853¥ 27,198$102,386

2018

Note 18. Contingent Liabilities
Contingent liabilities as of March 31, 2018 and 2017 were as follows:
Millions of yen

Guarantees

Thousands of
U.S. dollars (Note 3)

2018

2017

2018

¥14,396¥10,256$135,814

Note 19. Leases
1. Finance lease transactions(1) Leased assets
Leased assets primarily consist of machinery and equipment and software.
(2) Depreciation method for leased assets
Depreciation method for leased assets is as stated in “f. Depreciation, 2) Leased assets” in “Note 2. Summary of Significant Accounting Policies”.
In addition, finance leases other than those that were deemed to transfer the ownership of the leased assets to the lessees andcontracted before April 1, 2008, are accounted for by the method that is applicable to ordinary operating leases.

31 Fuji Electric Report Financials 2018

Pro forma information of those leased property such as acquisition cost, accumulated depreciation, accumulated impairment loss,
obligations under finance leases, lease expense, depreciation expense, interest expense and impairment loss on an “as if capitalized” basis
for the years ended March 31, 2018 and 2017 were as follows:(a) Acquisition cost and accumulated depreciation under finance leases:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Acquisition cost
Accumulated depreciation
Net leased property

2018

2017

2018

¥1,433
1,277¥   156¥1,7091,417¥   292$13,522
12,043$ 1,479(b) Obligations under finance leases:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Due within one year
Due after one year
Total

2017

¥154
208
¥362

¥ 93
115
¥208

2018

$   886
1,076$1,962(c) Lease expense, depreciation expense and interest expense under finance leases:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018

Lease expense
Depreciation expense
Interest expense

2017

¥174
135
13

¥127
96
8

2018

$1,20190980(d) Method of calculating estimated depreciation expense
Depreciation is computed by the straight-line method over the lease period assuming no residual value.
(e) Method of calculating estimated interest expense
Interest expense is computed and allocated to each period using the interest method assuming interest expense to be the excess of totallease payments over the acquisition cost.

2. Operating lease transactions
The minimum rental commitments under noncancellable operating leases as of March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Due within one year
Due after one year
Total

2018

2017

2018

¥2,1053,024¥5,129¥1,2801,138¥2,418$19,868
28,526$48,394

Note 20. Segment Information
1. Segment information(1) Outline of reporting segments
The Companies’ reporting segments are components for which
separate financial information is available and whose operating
results are reviewed regularly by the Board of Directors of theCompany in order to make decisions about resource allocation andto assess performance. The Company has business headquarters
by products and services at its head office. The business headquarters prepare comprehensively global strategies related to theirproducts and services and control their business activities.
Accordingly, the Companies have five reporting segments,
principally based on the business headquarters, that take into
account the similarity of category and nature of products andservices: Power Electronics Systems - Energy Solutions, PowerElectronics Systems - Industry Solutions, Power and New Energy,
Electronic Devices and Food and Beverage Distribution. Thesesegments except for Electronic Devices and Food and Beverage
Distribution consist of 2 or more business segments.
As of April 1, 2017, reflecting change of organization structure,
the reporting segments were reclassified from previous fivesegments that were Power and Social Infrastructure, Industrial
Infrastructure, Power Electronics, Electronic Devices and Food andBeverage Distribution, to the new five segments that are statedabove. The reporting segment information for the year ended March
31, 2017 has been reclassified to reflect this change.

Fuji Electric Report Financials 201832

Main products and services of each reporting segment consisted of the following:
Reporting segments

Main products and services

Power Electronics Systems—Energy Solutions

Factory energy management systems (FEMS), power distribution, smart meters, substation equipment,
industrial power supply facility, data centers, uninterruptible power systems (UPSs), power conditioning
sub-systems (PCSs), switchboards, power distribution and control equipment

Power Electronics Systems—Industry Solutions

Inverters, motors, FA components, drive control systems, measuring and control systems, distribution
systems, plant factories, measuring instruments and sensors, radiation monitoring systems, transportsystems, electricity and air conditioning equipment construction, information systems

Power and New Energy

Thermal/geothermal/hydro power generation plants, solar power generation systems, wind power
generation systems, fuel cells

Electronic Devices

Power semiconductors, magnetic disks

Food and Beverage Distribution

Beverage vending machines, vending machines for food and other goods, showcases, automaticchange dispensers, eco-friendly stores(2) Calculation method of net sales, profit or loss, assets, liabilities and other items on each reporting segment
The accounting policies applied by each reporting segment are consistent with those described in “Note 2. Summary of Significant
Accounting Policies.” Segment profit or loss presented in segment information is calculated based on operating income in the consolidated
statements of income. Intersegment sales and transfer are determined by market value.
(3) Information on net sales, profit or loss, assets, liabilities and other items by each reporting segment
Reporting segment information as of March 31, 2018 and 2017 and for the years then ended were as follows:
Millions of yen
PowerElectronics
Systems—
EnergySolutions

PowerElectronics
Systems—
Industry
SolutionsPower and New
EnergyElectronic
Devices

Food andBeverageDistribution

OthersSales to third parties
Inter-segment sales andtransfers¥217,861¥306,754¥ 96,757¥123,502¥117,485¥31,092

6,239

9,109

122

3,369

268

29,314

48,421(48,421)—

Total sales

224,100

315,863

96,879126,871

117,753

60,406

941,872(48,421)893,451

Year ended March 31, 2018

Total

Adjustments

Consolidated¥893,451¥     —

¥893,451

Sales, profits or losses andassets by reporting
segments
Net sales

Segment profits (losses)¥ 14,662¥ 18,273¥  5,521¥ 13,699¥  6,234¥ 2,861¥ 61,250¥ (5,288)¥ 55,962

Segment assets¥187,498¥257,615¥113,725¥151,108¥ 80,743¥31,669¥822,358¥ 96,501¥918,859¥  5,837¥  6,015¥  1,444¥ 12,882¥  2,271¥   808¥ 29,257¥   894¥ 30,151

Other items
Depreciation and amortization
Investments for companies
applied equity method¥     80

¥ 15,040¥      —

¥      —

¥      —

¥     —

¥ 15,120¥      —

¥ 15,120

Capital expenditures¥  6,871¥  4,559¥  1,335¥ 10,614¥  5,081¥   641¥ 29,101¥   1,347¥ 30,448

Year ended March 31, 2017

Power
Electronics
Systems—
EnergySolutions

PowerElectronics
Systems—
Industry
SolutionsPower and New
EnergyTotal

Adjustments

Consolidated

Sales to third parties
Inter-segment sales andtransfers¥210,285¥277,826¥93,427¥837,765¥      —

¥837,765

8,462

8,201

411

3,156

311

27,42647,967(47,967)—

Total sales

218,747

286,027

93,838118,462

109,557

59,101885,732(47,967)

837,765

Millions of yen

Electronic
Devices

Food andBeverageDistribution

Others¥115,306¥109,246¥31,675

Sales, profits or losses andassets by reporting
segments
Net sales

Segment profits (losses)¥ 13,725¥ 13,949¥ 7,479¥  8,030¥  6,029¥ 2,066¥ 51,278¥   (6,569)¥ 44,709

Segment assets¥183,066¥249,462¥88,376¥148,761¥ 78,912¥32,066¥780,643¥106,020¥886,663¥  5,462¥  5,884¥ 1,473¥ 12,594¥  2,253¥   802¥ 28,468¥977¥ 29,445

Other items
Depreciation and amortization
Investments for companies
applied equity method¥     83

¥ 14,138¥     —

¥      —

¥      —

¥     —

¥ 14,221¥      —

¥ 14,221

Capital expenditures¥  5,805¥  7,884¥ 1,321¥  6,248¥  3,885¥   782¥ 25,925¥    667¥ 26,592

33 Fuji Electric Report Financials 2018

Thousands of U.S. dollars (Note 3)
PowerElectronics
Systems—
EnergySolutions

PowerElectronics
Systems—
Industry
SolutionsPower and New
EnergyElectronic
Devices

Food andBeverageDistribution

Sales to third parties
Inter-segment sales andtransfers$2,055,294$2,893,913$  912,810$1,165,122$1,108,354

58,86585,9291,149

31,782

2,530

276,547

456,802(456,802)—

Total sales

2,114,159

2,979,842

913,959

1,196,904

1,110,884

569,8448,885,592(456,802)

8,428,790

Year ended March 31, 2018

Others

Total

Adjustments

Consolidated

Sales, profits or losses andassets by reporting
segments
Net sales$293,297 $8,428,790$      — $8,428,790

Segment profits (losses)$  138,323$  172,394$   52,088$   129,241$   58,814$ 26,976 $  577,836$  (49,892) $   527,944

Segment assets$1,768,851$2,430,335$1,072,878$1,425,552$   761,730$298,753 $7,758,099$ 910,388 $8,668,487$   55,075$   56,747$   13,631$   121,534$   21,427$  7,600 $  276,014$   8,437 $   284,451

Other items
Depreciation and amortization
Investments for companies
applied equity method$      756$  141,891$       —

$       —

$       —

$       — $  142,647$         — $   142,647

Capital expenditures$   64,828$   43,012$   12,597$   100,138$   47,942$  6,021 $  274,538$  12,714 $   287,252

Notes: 1.	Others segment consisted of business segments not attributable to reporting segments and included financial services, real estate operations, insurance agency services, travel
agency services, printing and information services, etc.
2. The adjustments for segment information above were as follows:
Thousands of
U.S. dollars(Note 3)

Millions of yen

Corporate expense*

2018

2017

2018

¥(5,287)¥(6,591)$(49,880)

Elimination of intersegment sales
Total

(1)

22

(12)

¥(5,288)¥(6,569)$(49,892)

	* Corporate expense mainly consisted of administration cost of the Company.
Thousands of
U.S. dollars(Note 3)

Millions of yen

Corporate assets*
Elimination of intersegment transactions
Total

2018

2017

2018

¥ 309,678¥ 274,692$ 2,921,500(213,177)(168,672)(2,011,112)¥   96,501¥ 106,020$   910,388	* Corporate assets mainly consisted of invested cash surpluses (cash and cash equivalents), long-term invested assets(investment securities), assets relating to administration department and assets of a financing subsidiary company.
3. Segment profits (losses) were reconciled to operating income (loss) in the consolidated statements of income.

2. Related information
Related information as of March 31, 2018 and 2017 and for the years then ended were as follows:
Geographic information(a) Sales
Thousands of
U.S. dollars (Note 3)

Millions of yen

Japan
Asia (except for China), Others
China
EuropeAmerica
Consolidated

2018

2017

2018

¥674,744
110,935
74,96817,584
15,220¥893,451¥632,723
106,150
67,463
16,595
14,834¥837,765$6,365,513
1,046,542
707,253
165,896
143,586$8,428,790

Note: Net sales information above is based on customer location.

(b) Tangible fixed assets
Thousands of
U.S. dollars (Note 3)

Millions of yen

Japan
Asia (except for China), Others
China
EuropeAmerica
Consolidated

2018

2017

2018

¥136,205
22,342
14,597782
674¥174,600¥135,613
24,306
12,179724
695¥173,517$1,284,961
210,765
137,708
7,382
6,359$1,647,175

Fuji Electric Report Financials 201834

3. Information on impairment loss of fixed assets by each reporting segment
Information on impairment loss of fixed assets by each reporting segment for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2018Power Electronics Systems—Energy Solutions
Power Electronics Systems—Industry Solutions
Power and New Energy
Electronic Devices
Food and Beverage Distribution
Others
Total

¥—
—
—
—
—
—
¥—

2017

2018

¥1,356—————¥1,356

$—
—
—
—
—
—
$—

4. Information on amortization of goodwill and unamortized balance by each reporting segment
Information on amortization of goodwill and unamortized balance by each reporting segment for the year ended March 31, 2018 and2017 were as follows:
Millions of yen

Year ended March 31, 2018

Power
Electronics
Systems—
EnergySolutions

Amortization
Balance as of March 31

¥308
¥612

Year ended March 31, 2017

Power
Electronics
Systems—
EnergySolutions

Amortization
Balance as of March 31

¥495
¥875

Year ended March 31, 2018

Power
Electronics
Systems—
EnergySolutions

PowerElectronics
Systems—
Industry
Solutions

Amortization
Balance as of March 31$2,885$5,770

$ 93
$747

Power
Electronics
Systems—
Industry
Solutions¥ 9¥79Power and New
EnergyElectronic
Devices¥   189¥1,456¥23¥70

Food and Beverage
Distribution¥—¥—

OthersConsolidated¥—¥—¥   529¥2,217

OthersConsolidated¥—¥—¥   765¥2,764

OthersConsolidated$—$—$ 4,992$20,918

Millions of yen
PowerElectronics
Systems—
Industry
Solutions¥10¥94Power and New
EnergyElectronic
Devices¥   195¥1,697¥65¥98

Food and Beverage
Distribution¥—¥—

Thousands of U.S. dollars (Note 3)

Power and New
EnergyElectronic
Devices$ 1,792$13,739$221$662

Food and Beverage
Distribution$—$—

5. Information on gain on negative goodwill by each reporting segment
None

Note 21. Information on Transactions with Related Parties
For the year ended March 31, 2018
None

Note 22. Business Combinations
For the year ended March 31, 2018
None

35 Fuji Electric Report Financials 2018

Note 23. Asset Retirement Obligations
Asset retirement obligations recorded on the consolidated balance sheets
1. Outline of asset retirement obligations
The Companies record asset retirement obligations related to the expenses for removing asbestos from company-owned buildings upon
their dismantlement and the obligations to restore head offices, sales offices and other premises to their original condition upon terminationof their lease contracts.
Regarding some of the obligations to restore head offices, sales offices and other premises to their original condition, the Companies
estimate nonrecoverable amounts of deposits for those premises and record the portion attributable to the current year as expenses,
instead of recording asset retirement obligations.

2. Calculation method of asset retirement obligations
In calculating the amounts of asset retirement obligations, the Companies estimate a period of use between 9 and 49 years and use a
discount rate equivalent to the interest rate of government bonds corresponding to the use period (0.3% to 2.3%).

3. Changes in the total amounts of asset retirement obligations
Changes in the total amounts of asset retirement obligations for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Balance at the beginning of the year
Increase due to acquisition of property, plant and equipment
Adjustment due to passage of time
Decrease due to fulfillment of obligations
Balance at the end of the year

2018

2017

2018

¥1,986—8(63)¥1,931¥2,0490
8(71)¥1,986$18,743—76(599)$18,220

Note 24. Amounts Per ShareInformation of amounts per share as of March 31, 2018 and 2017 and for the years then ended were as follows:Yen

Net assets per share
Net income per share

U.S. dollars (Note 3)

2018

2017

¥462.9052.87¥407.68
57.36

2018

$4.3670.499

Diluted net income per share in 2018 and 2017 are not disclosed because there is no potential common stock that has a dilutive effect.

Fuji Electric Report Financials 201836

Note 25. Subsequent Events
1. Change in stock trading unit and stock consolidation
At a meeting of the Board of Directors of Fuji Electric Co., Ltd., held on May 24, 2018, a resolution was passed to institute a partial
amendment to the portion of the Company’s articles of incorporation pertaining to the stock trading unit based on the provisions stipulated
in Article 195, Paragraph 1 of the Companies Act of Japan. In addition, it was resolved that the Company will submit a proposal for approval
regarding a stock consolidation to the 142nd General Meeting of Shareholders, which is scheduled to be held on June 26, 2018.
(1) Reason for change in stock trading unit and stock consolidation	Nationwide stock exchanges have announced the “Action Plan for Consolidating Trading Units,” which states that all domestic listedcompanies should consolidate the trading unit for their shares of common stock to 100 shares by October 1, 2018.
		 Fuji Electric is listed on the Tokyo Stock Exchange, the Nagoya Stock Exchange, and the Fukuoka Stock Exchange, and therefore
plans to respect the intent of this action plan by changing the trading unit for its shares of common stock from the current 1,000 sharesto 100 shares. In conjunction with this change in stock trading unit, the Company has also resolved to conduct an one for fifth stock
consolidation in order to adjust the unit of investment in the Company to the level deemed desirable by the relevant stock exchanges(above ¥50,000 and below ¥500,000).
(2) Details of change in stock trading unit
The trading unit for shares of common stock will be changed from 1,000 shares to 100 shares on October 1, 2018.
(3) Details of stock consolidation
a. Class of share
		 Common stockb. Method and ratio		Effective October 1, 2018, the Company will perform an 1-for-5 stock consolidation based on the number of shares held byshareholders listed on the final shareholder registry on September 30, 2018.
c. Decrease in number of shares following stock consolidation		

Total number of issued and outstanding shares prior to the stock consolidation (as of March 31, 2018)

746,484,957

Decrease in shares following the stock consolidation

597,187,966

Total number of issued and outstanding shares after the stock consolidation

149,296,991

Note: T he figures for “decrease in shares following the stock consolidation” and “total number of issued and outstanding shares after the stock consolidation” are theoretical values
calculated by multiplying the total number of issued and outstanding shares prior to the stock consolidation by the ratio of the consolidation.

(4) Treatment of Share fractions resulting from stock consolidation
	In the event that the stock consolidation results in fractions of shares, all of these share fractions will be sold, as stipulated in Article 235of the Companies Act, and the holders of these share fractions will be compensated in accordance with the fractions of shares held.
(5) Number of shares authorised to be issued on effective date of stock consolidation
	In reflection of the decline in the total number of issued and outstanding shares resulting from the stock consolidation, the number ofshares authorised to be issued will be reduced by the same ratio as the stock consolidation (1-for-5) on the effective date of the stock
consolidation (October 1, 2018).
Number of shares authorised to be issued prior to the stock consolidation

1,600,000,000

Number of shares authorised to be issued after the stock consolidation(effective on October 1, 2018)

320,000,000(6) Impact on per share information
	Assuming the share consolidation was conducted at the begging of the years, per share information for the years ended on March 31,2018 and 2017 would be as follows:Yen

Net assets per share
Net income per share

37 Fuji Electric Report Financials 2018

U.S. dollars (Note 3)

2018

2017

¥2,314.50
264.34¥2,038.40
286.82

2018$21.835
2.494

Independent Auditor’s Report

Fuji Electric Report Financials 201838

Gate City Ohsaki, East Tower,
11-2, Osaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan
Contacts: Public and Investor Relations Dept.
TEL: +81-3-5435-7111 www.fujielectric.com/

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00A9-E-0127 Printed in Japan 2018.9